Bundesbank Says Banks Must Ready for Greater Crisis Strains
- Insolvencies could increase by 35% by first quarter of 2020
- Risks overall seen as manageable for German banking system
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Germany’s financial system should prepare for increasing strains as a result of company failures and rising indebtedness, ensuring that credit will continue to flow, according to the Bundesbank.
“The effects of the real economic crisis have not yet fully arrived in the German financial system,” the central bank said in its Financial Stability Review published Tuesday. “Enterprises’ solvency problems are likely to become all the more noticeable in the financial system the longer the crisis continues,” with market valuations only partially reflecting economic fundamentals.