Guest article by Dr Andreas Dombret in the Handelsblatt newspaper published on 10 April 2014.
If the financial crisis has taught us one thing, it is that it takes just one distressed bank to potentially bring down other institutions and inflict damage on the entire financial system. So if we are to prevent distress in the financial system, we will need to make the individual banks more resilient. And first and foremost, this means increasing their capital. The higher a bank’s capital buffer, the more effectively it can cushion losses, and the less likely the prospect of it encountering problems that might threaten its very existence.