In its second report to the Bundestag (reporting period: April 2014 to March 2015), the Financial Stability Committee concluded that the German financial system’s risk environment was primarily influenced by two factors. New monetary policy easing resulted in high liquidity as well as continuing declines in interest rates. In addition, increasing risks emanating from the European and international environment played a major role. This could be seen in uncertainty concerning the direction of economic and financial policy in Greece, the Russia-Ukraine conflict and declines in oil prices.

Persistently low interest rates have repeatedly intensified incentives to seek out higher yields. The Financial Stability Committee examined whether financial intermediaries were taking any risks that would become untenable in the event of a change in the market environment and would then become a problem for financial stability. However, banks, building societies, life insurers and the residential real estate market did not show any indications that this was the case.

This and other analyses showed that the German financial system is sufficiently robust to fulfil its central macroeconomic functions even in potential stress situations. However, the Financial Stability Committee also concluded that risks to financial stability posed by the macroeconomic and international environments have increased. Low interest rates can lead to a variety of negative developments and must therefore continue to be monitored, analysed and closely followed.