Financial and monetary system
Disruptions to the financial system not only cause economic damage; they also prevent monetary policy from being implemented and can therefore jeopardise price stability. Hence, in order to ensure the stability of the financial system, the Bundesbank plays an active role in national and international institutions.
Through its involvement in banking supervision, the Bundesbank has gained deep insights into German credit institutions’ business situation. However, financial institutions and financial markets today are interconnected across the world by means of modern technology and a multitude of financial products. Particularly the current crisis has shown that the monitoring of individual institutions does not uncover all the risks that could potentially threaten a financial system. An additional look at the financial system in its whole complexity is therefore essential. What is known as macroprudential supervision is closely interlinked with classic banking supervision and – besides banks – also analyses insurance companies, financial markets and financial infrastructures.
The Deutsche Bundesbank works in all international institutions and committees dedicated to stabilising the financial system. These include the European Systemic Risk Board (ESRB), the relevant committees of the Bank for International Settlements (BIS) and the Financial Stability Board (FSB). In addition, the President of the Deutsche Bundesbank is the German Governor of the International Monetary Fund (IMF). The Bundesbank also publishes a Financial Stability Review each year, in which it evaluates the robustness of the German financial system and analyses the risks to financial stability. The concrete recommendations to market participants and policymakers provide an impetus for the ongoing development of the regulatory framework and the financial system’s efficiency.