The Bundesbank published its annual Financial Stability Review on 23 November 2023. In the review the Bundesbank explains vulnerabilities in the German financial system and highlights risks to its stability.

The key conclusions are:

• The German financial system has so far proven to be stable in the current macro-financial environment.
• However, the interest rate reversal and subdued economic developments continue to pose major challenges.
• The resilience of the banking system could be significantly diminished during periods of stress. The package of macroprudential measures is therefore still appropriate.
• Banks should also use their profits to further strengthen their tier 1 capital. Moreover, they should maintain and step up their efforts to increase their resilience to operational risk, such as cyber risk.