Germany: Financial System Stability Assessment

July 20, 2022

Preview Citation

Format: Chicago

Germany: Financial System Stability Assessment, (USA: International Monetary Fund, 2022) accessed December 21, 2024

Summary

This paper reviews Germany’s Financial System Stability Assessment report. The financial sector has weathered the impact of the pandemic and the war in Ukraine relatively well so far, but risks remain elevated. The Financial System Assessment Program (FSAP) solvency stress tests show that the significant institutions and less significant institutions are overall resilient to an adverse scenario. The main risks to financial stability relate to a global resurgence of coronavirus disease 2019 with extended supply chain disruptions, a scarcity of gas and oil, and de-anchoring of inflation expectations in the United States and advanced Europe. Consistent with the authorities’ findings, the FSAP found small vulnerabilities from climate transition risks to the banking system. Macroprudential policy is being tightened but rising cyclical vulnerabilities will require additional action. Good progress had been made in strengthening the microprudential frameworks for banking and insurance since the 2016 FSAP. The system of Deposit Guarantee Schemes/Institutional Protection Schemes needs reform, which should be informed by a review of the distortions resulting from depositors’ high level of protection guaranteed under the current regime.

Subject: Financial institutions, Financial sector policy and analysis, International organization, Monetary policy

Keywords: Assessment Program, Bank Contagion analysis, Commercial banks, Cooperative banks, Coverage ratio, Europe, Financial Sector Assessment Program, FSAP bank contagion analysis, FSAP solvency stress tests, Global, Insurance companies, Liquidity backstop, Mission to Germany, Risk pooling, Stress testing

Publication Details

Pages:

76
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2022/231
Stock No:

1DEUEA2022003
ISBN:

9798400216886
ISSN:

1934-7685

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