06.11.2025

The risks to the German financial system have increased, as reported in the Bundesbank’s latest Financial Stability Review. The German economy is faced with structural challenges, and the high valuations in equity and bond markets pose the risk of larger, sudden market price corrections, Bundesbank Executive Board member Michael Theurer said at the presentation of the Financial Stability Review in Frankfurt.

Once a year, the Bundesbank invites guests from the spheres of politics, academia and society to the Capital City Reception in Berlin to exchange views on the economic situation and current topics. This year’s event saw Bundesbank President Joachim Nagel welcome Zanny Minton Beddoes, editor-in-chief of “The Economist” and co-editor of the German weekly newspaper “Die Zeit”, as a special guest speaker. Around 200 guests came to hear Minton Beddoes and Nagel speak on “Europe’s new global role: competition, cooperation and confrontation”.

Regulation is not an end in itself. It provides the infrastructure for trust, said Bundesbank Executive Board member Lutz Lienenkämper in Frankfurt at the second symposium on the regulation of investment firms in the capital markets union. Representatives from academia and supervisors spoke about current regulatory developments in the securities sector and supervisory trends in 2025.

State and local government finances recorded a large deficit of €43 billion in 2024. Excluding one-off factors, this figure is considerably lower, but it is clear nonetheless that local governments, in particular, are bearing a substantial structural burden. They are unlikely to be able to balance their budgets on their own. The federal states share responsibility for this, and the Monthly Report sets out specific starting points. It also sheds light on the situation in individual federal states as well as the new financial leeway arising from the debt brake reform and the special fund. This leeway should be used specifically for additional investment.