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German Financial Stability Committee Annual Report 2020

Today, the German Financial Stability Committee (G-FSC) presented its seventh report to the German Bundestag. The report shows that the committee focused primarily on the risk of underestimating credit risk, the low interest rate environment and real estate markets. The reporting period runs from 1 April 2019 to 31 March 2020 and, for the most part, thus lies prior to the outbreak of the coronavirus pandemic. This pandemic and the measures taken to contain it led to a sharp slump in economic output across the globe. Further developments remain uncertain, particularly with regard to the depth and duration of the recession and the impact on the financial system. Bundesbank Vice-President Claudia Buch believes that the danger is yet to be averted. “The German financial system has thus far proven to be stable during the pandemic,” she stated and referred to the measures taken by governments and central banks to stabilise the economy and support the financial system. “However, it is likely that solvency problems will increase in the coming months,” she continued.