Europe Needs German-Style Supervision of Small Banks

The German banking system is hardly a model for the rest of Europe. During the financial crisis, Berlin spent or set aside hundreds of billions of euros to rescue its lenders. From its banking giant, Deutsche Bank, to many smaller savings banks, there is still no shortage of lenders that are struggling with low profitability.

Yet in one sense, the German banking world is offering the rest of Europe a lesson in transparency. Last week, the Bundesbank and Bafin -- Germany's central bank and the top financial supervisory authority -- published the results of a stress test on the country's less-significant institutions. This level of openness is unique among the euro zone's largest countries and should serve the rest as an example.