Ladies and gentlemen,
I warmly welcome you to the presentation of the Bundesbank’s Financial Stability Review this year.
In past years, we have identified vulnerabilities in the German financial system – in relation to rising credit risk and higher interest rates.
In the meantime, some aspects of these adverse scenarios have become reality.
Almost one year ago exactly, euro area inflation stood at just over 10%. The Governing Council of the ECB had therefore raised key interest rates for the first time in more than a decade, to 4.5% for its main refinancing operations at last report.
What impact has this sharp rise in interest rates, which barely anyone could have predicted, had in the financial system? I would like to highlight three aspects.
First, the financial system has coped with the interest rate rise well so far, but the effects have not yet fully materialised.
Second, structural change is placing demands on the financial system as well. Climate risks, geopolitical risks, demographic change and digitalisation mean that adjustments have to be made – in the real economy and in the financial system itself.
Third, this requires the financial system to be resilient enough to cope with increased risks and heightened uncertainty on its own. The good profitability situation at present offers banks the opportunity to strengthen their resilience.