November 22, 2019 10:24 am

Deutsche Bundesbank warns of growing risks

At the presentation of the Financial Stability Report on Thursday, Bundesbank Vice-President Claudia Buch addressed warning words to the German banks. She is concerned that the financial stability might be under threat. “The vulnerabilities of the German financial system to unexpected macroeconomic developments are growing further,” Buch explained.

According to Buch, the proportion of risky creditors in the balance sheets of German financial institutions has continued to rise. “Banks are now increasingly financing the very enterprises that would be the first to encounter problems in the event of an unexpected economic deterioration,” she said. Rising real estate prices would also represent an increasing risk for the banks.

As a result, Moody’s changed its rating for the German banking system from “neutral” to “negative”. Financial Times

This post was written by Jens Secker

(Image rights: Deutsche Bundesbank)

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