Bundesbank President Jens Weidmann has spoken out in favour of making the rules on debt more binding. "It would be helpful for the rules of the Stability Pact to be simplified," he said in a speech delivered in Freiburg. Furthermore, Mr Weidmann added, a more rigorous interpretation of the rules could be achieved by giving responsibility for fiscal surveillance to an independent authority instead of the European Commission.

The macroeconomic environment is being shaped by the interest rate reversal and heightened uncertainty. So far, the German financial system has coped well with the rise in interest rates over the last year, but the effects of this rise have not yet fully materialised. Structural change in the economy is also likely to further increase credit risk.