The German financial system has weathered the exceptionally strong rise in interest rates well overall and has proved stable over the past months, the Bundesbank writes in its Financial Stability Review 2024. Credit risk is now increasingly coming under the spotlight, however. The financial system is facing acute challenges due to geopolitical tensions and a weak economy. The economy is also undergoing transformation, said Bundesbank Executive Board member Michael Theurer. Our top priority must be a resilient financial system.

German economic output rose unexpectedly in the third quarter of 2024, according to the Monthly Report. However, none of the key demand components currently give any cause to expect a marked recovery in the short term. “The industrial sector is faced with a difficult environment and is under high pressure to adapt,” the economists write. In addition, the labour market is becoming increasingly gloomy owing to the protracted bout of economic weakness.

We could be on the verge of a global economic turning point, Bundesbank President Joachim Nagel said in an interview with the weekly newspaper “Die Zeit”. In this situation, we need more Europe, not less. Trump’s proposed trade tariffs could prove very painful for Germany. Should they be implemented, he said, we might even see negative economic growth next year. Mr Nagel considers European monetary policy to be on the right track.

At the beginning of November, Fritzi Köhler-Geib was appointed as new member of the Executive Board. The Executive Board has therefore reallocated its areas of responsibility. The following allocation of responsibilities shall apply with immediate effect.