The International Monetary Fund (IMF) has suggested that Clearstream Banking Luxembourg (CBL) be supervised by the European Central Bank (ECB), reports Delano. The CSD is currently overseen by Luxembourg’s financial regulatory authority, Commission de Surveillance du Secteur Financier (CSSF), as a “less significant institution” (LSI). Its “substantial” role in the financial system, however, might warrant moving its supervision to ECB.
The suggestion was presented in IMF’s recently published “Technical note on selected issues in banking supervision”. According to the report, as an international CSD, the global systemic importance and operational complexity of CBL might make a shift in its supervisory status necessary. The shift could be initiated by ECB or CSSF.
CSSF has revealed that “the issue of CBL’s supervisory status is not new”. It dates back to the inception of the single supervisory mechanism (SSM), which subjects “specialised institutions” to “limited powers”. This could be an argument for keeping CBL under the LSI framework.
Despite this, CSSF has acknowledged that CBL is “indeed systemically relevant” and there is also argument for considering it a “significant institution” that comes under direct ECB supervision.
CBL’s supervisory status is already “periodically reassessed at the SSM level”. Nevertheless, CBL was included in the ECB’s comprehensive assessment, which could be a hint that the organisation is heading towards direct ECB supervision.
