Summary of January Monthly Report

Long-term trends in corporate financing in Germany as derived from the financial accounts data

In the past two decades, the overall financing volume of enterprises in Germany has increased in both nominal and real terms on the back of aggregate growth. But the structure of funding has changed during this period. While internal funding remained the main source of corporate finance and its share tended to grow further, external funding was subject to strong cyclical swings that shadowed developments in the overall economy. In addition, structural shifts were apparent within external financing. With few exceptions, borrowing has consistently been the primary source of external funds. However, there have been changes in the lender profile. Whereas this role was, in the past, assumed mainly by banks, a trend towards other lenders can be observed in the period under review. For instance, large (international) groups have increasingly been channelling financial resources via dedicated funding vehicles within the group.

Bank lending, though still the most important source of external funding, has thus seen its importance wane systematically over the past 20 years. These structural shifts are closely related to the changing macroeconomic and institutional environment. Ongoing economic integration, which has been particularly pronounced within the European Union with the launch of monetary union and the EU’s eastward enlargement, has probably been a key factor in this. Tighter regulatory requirements and changes in corporate taxation are also likely to have had an impact on the pattern of financing.

“Households and their finances”: a survey of household wealth and finances in Germany

The Bundesbank conducted its first random survey of the wealth and finances of German households between September 2010 and July 2011. The results of this voluntary survey have been summarised in the panel study entitled “Households and their finances” (Private Haushalte und ihre Finanzen, or PHF). In future, the data will provide a broad picture of households’ assets and debts and their determinants, thus allowing a better understanding of issues such as saving and consumption behaviour, the distribution of wealth or insolvency risks. The PHF is part of a new, harmonised survey being carried out in all euro-area countries. It will therefore be relatively easy to place the German results in a European context. The data mainly comprise households’ balance sheets, pension entitlements, savings and income, data on employment, consumption, financial propensities and expectations, and a large number of demographic features.

A representative sample comprising 3,565 households provided data for the first survey wave between September 2010 and July 2011. Wealthy households are overrepresented in the survey to allow better analysis of the composition and distribution of wealth. The next survey is scheduled for 2014, and will involve as many as possible of the households questioned in the first wave. Not all of the statistical preparations have yet been completed, and the figures are therefore provisional. Nonetheless, it is possible to gain a first impression of certain outcomes, eg regarding the distribution of retail property and the associated mortgage burden.

The European single market in payments nearing completion

For around ten years, the European Union, the Eurosystem and the European banking industry have been working on creating the Single Euro Payments Area (SEPA) in Europe. The project has now reached a key milestone: end-dates have been set for migration from the national procedures to SEPA credit transfers and direct debits. The national procedures will be replaced by the new SEPA payment instruments from February 2014 onwards, as envisaged in an EU regulation scheduled to come into force in the second quarter of 2012. The European Parliament and the European Council have yet to formally endorse the draft regulation. The regulation specifies technical requirements for credit transfers and direct debits in euro that do not apply solely to interbank transactions but also directly to bank customers. However, alongside credit transfers and direct debits, cashless payments also encompass card payments and new innovative procedures for making payments via the internet or by mobile phone, which show considerable market potential. Policymakers are paying increasing attention to these market segments with a view to boosting the synergies of a single European market in this area too. The European Commission is starting to look into possible barriers in this field in an ongoing public consultation on a Green Paper.