The European sovereign debt crisis remains the greatest threat to financial stability in Germany. The Bundesbank considers that a substantial worsening of the situation would have a significant adverse impact on German banks and insurers. In addition, low interest rates, high liquidity and potential exaggerations in the German real estate market could pose a future threat to financial stability.

The German financial system has functioned well during the pandemic; the extensive government measures have shielded the financial sector from losses. This is the conclusion reached by the Bundesbank in its Financial Stability Review 2021.