Federal government wants to make the banking industry more crisis-proof

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The risk reduction law launched by the cabinet on Wednesday is drawing consequences from the financial crisis.


(Photo: dpa)

Berlin The federal government wants to involve creditors and owners more in bank failures. Among other things, the risk reduction law launched by the cabinet on Wednesday provides that large banks will have to maintain a loss buffer of at least eight percent of their total assets in the future.

The government is thus implementing parts of the EU banking package from mid-2019 into national law. Taxpayers should not be put under pressure again in the next financial crisis. Finance Minister Olaf Scholz (SPD) spoke of an “important step to take the consequences of the financial crisis”. This would protect taxpayers and investors.

Bonds that are particularly affected by risk of loss may only be sold in denominations of at least 50,000 euros. This is to protect retail investors. The credit institutions should also make their refinancing more long-term.

More: Investment banking helps Deutsche Bank in the corona crisis.

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