The German financial system has weathered the exceptionally strong rise in interest rates well overall and has proved stable over the past months, the Bundesbank writes in its Financial Stability Review 2024. Credit risk is now increasingly coming under the spotlight, however. The financial system is facing acute challenges due to geopolitical tensions and a weak economy. The economy is also undergoing transformation, said Bundesbank Executive Board member Michael Theurer. Our top priority must be a resilient financial system.

Initial figures from the Federal Statistical Office indicate that Germany’s gross domestic product (GDP) fell by 0.1% in the third quarter of 2023 compared to the previous quarter after adjustment for price, seasonal and calendar effects. The data suggest that private consumption, in particular, declined. By contrast, investment in machinery and equipment provided positive stimuli.