Macroprudential s upervision: A Key l esson from the Financial c risis

In this paper we argue that the introduction of macroprudential supervision constitutes the key lesson from the crisis for financial regulation and supervision. We discuss the complex legal and institutional frameworks of macroprudential supervision in Austria and in the EU. In Austria, we identify room for improving the current institutional setup, e.g. by enhancing the role of the supervisory authority and the central bank, defining a comprehensive macro­ prudential strategy (including a communication strategy) and implementing an internal gover­ nance structure that avoids blameshifting among the relevant institutions. At the EU level, we find that the ongoing macroprudential review should address the politico­economic challenges posed by the wide­ranging macroprudential powers of the Single Supervisory Mechanism (SSM) to ensure adequate political control. Moreover, we show that traditional microprudential instruments (e.g. Pillar 2) are conceptually ill­suited to pursue macroprudential objectives. We therefore suggest prioritizing macroprudential measures over Pillar 2 measures in the ongoing macroprudential review.