Making rules for banks Information about Bundes-Bank. In easy-to-read format.

City centre with bank buildings ©Reinhild Kassing

There are lots of banks in Germany.

About banks with thousands of branches.

You can see their buildings in town.


Different bank buildings with cash transport vehicles outside ©Reinhild Kassing

Here you can see a few bank buildings.


Rulebook for banks ©Reinhild Kassing

The Bundesbank makes rules for these banks.

A rule is part of a law.

The Bundesbank also checks that the banks follow these rules.

This is also called banking supervision.

In other words, the Bundesbank supervises banks.


Bank building with Bundesbank sign ©Reinhild Kassing

The Bundesbank does not do this on its own.


BaFin ©Reinhild Kassing

It works with BaFin.

BaFin is the short name for the German Federal Financial Supervisory Authority.

ECB and Bundesbank ©Reinhild Kassing

And together with the ECB from 2014 onwards.

The ECB is the short name for the European Central Bank.


Open rulebook for banks ©Reinhild Kassing

The Bundesbank, the ECB and BaFin make rules for the banks together.


Closed vault ©Reinhild Kassing

One of the rules tells banks how much money they must have in order to be allowed to lend money.

This is important for you if you want to borrow money.

For example, a bank lends money to people if they want to buy a house.


Family standing in front of a house with a “for sale” sign ©Reinhild Kassing

But a house is very expensive.

That is why these people might not have enough money at the moment.

They cannot buy a house.


Man and woman going to the bank ©Reinhild Kassing

The people go to the bank.

The bank gives the people advice.


The bank gives people advice. ©Reinhild Kassing

If people earn enough money, the bank lends them money.


Signed purchase agreement ©Reinhild Kassing

This is called a loan.

But the money is not a gift.


Shaking hands after buying the house ©Reinhild Kassing

The people have to pay the money back to the bank later on.

The people even pay extra money back to the bank.

It costs money to borrow money.

This cost is called: interest.


Full vault ©Reinhild Kassing

The bank must always have enough of its own money to be able to lend money to people.


The bank cannot lend any money ©Reinhild Kassing

Otherwise people cannot borrow money.

The people would not be able to buy a house.


The bank cannot lend any money ©Reinhild Kassing

The Bundesbank and Bafin check that the banks in Germany follow the rules.


Inspectors going to the bank ©Reinhild Kassing

This is what the Bundesbank does to check on the banks: Inspectors from the Bundesbank go into the banks.


Inspectors inspecting documents ©Reinhild Kassing

The inspectors check the bank’s records.

The difficult name for these documents is balance sheet.


Inspectors see mistakes in documents ©Reinhild Kassing

Perhaps people in the bank have made mistakes.

They have perhaps done business where money can be lost. And then lost too much money.


Empty vault ©Reinhild Kassing

Then the bank does not have enough money to lend to people.

The inspectors from the Bundesbank notice this.


The rules for banks are updated ©Reinhild Kassing

The Bundesbank might then create a new rule.

Then this rule applies to all the banks.

Illustrations: © Reinhild Kassing