Macroprudential supervision

The entry into force of Capital Requirements Directive (CRD) (2013/36/EU) and Capital Requirements Regulation (CRR) (575/2013) for banks and large investment firms marked a turning point at the European level in the context of macroprudential policy for banks. This section describes the macro-prudential measures implemented in Luxembourg and which mainly affect the banking sector. The CSSF is the national designated authority under the CRD and, as such, responsible for implementing macro-prudential supervision and policy for Luxembourg banks. In the context of its missions, the CSSF, takes decisions after consultation and exchange with the Banque centrale du Luxembourg (BcL) and based upon recommendation or after requesting the opinion of the Comité du Risque Systémique (CdRS). The CSSF also acts in close cooperation with the relevant European institutions. The CSSF disposes of a policy toolkit to perform its duties, including the possibility of requiring banks to build additional capital buffers because of their systemic importance, the state of the financial cycle or because of structural risks. The CSSF can also set up risk weight floors. As macroprudential policy has an international dimension due to possible cross-border spillover effects and leakages, the CSSF is also led to recognise macroprudential policy measures taken by other countries and apply them to the entities falling under its supervision.

 

At the international level, the CSSF cooperates in several fora in the context of its macroprudential policy and supervision. The most frequent interaction takes place in the context of the Financial Stability Committee of the Eurosystem in SSM composition. Furthermore, the CSSF is represented in the ESRB General Board. Lastly, the CSSF participates in the regional consultative group for Europe of the Financial Stability Board.