The third Financial Stability Committee report concerned itself with more than just domestic developments. Corrections on the Chinese markets and political uncertainty triggered by the refugee crisis and Brexit are also having an impact on the German financial system.

Next to assessing the current risk situation in the German financial system, the Financial Stability Committee also discussed the introduction of the countercyclical capital buffer as a new macroprudential instrument. It noted that the sustained low interest rates in particular could remain the starting point for a variety of potential negative developments. This continues to require careful …

The Financial Stability Committee approved a recommendation to the German government regarding the creation of national macroprudential instruments for the residential real estate market. They comprise additional intervention rights on the part of the supervisory authority in order to counteract credit-driven overheating on the residential real estate market and potential systemic crises in Germany.

The ECB’s expansionary monetary policies are not the only factor contributing to uncertainty concerning the financial stability situation and trends in Germany. Developments in Greece and the Russia-Ukraine conflict also play a significant role. This is explored in more depth in the Financial Stability Committee’s second report, issued on 30 June 2015.

The low interest rate environment is placing earnings pressure on many financial market players and poses a particular challenge to German life insurers. The Financial Stability Committee presented these and other topics in its first annual report to the German Bundestag on 18 June 2014.