How much capital is needed both at the individual bank level and for the system as a whole especially in situations of macroeconomic stress? And is the capital in the system distributed across individual banks in the optimal way to cover potential systemic losses? A new study gives answers to these questions in an integrated supervisory framework.

The January 2018 edition of the Monthly Report describes how the internationalisation of German firms is impacting on domestic investment and analyses the importance of banks’ profitability and capital for monetary policy. It also looks at developments in corporate financing in the euro area and includes an article on the finalisation of Basel III.