Low interest rates put strain on financial sector says German regulator

According to the president of the German regulatory authority, BaFIN, low interest rates put strain on financial sector says German regulator.

Felix Hufeld, President of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) focused on three key issues in his speech at the authority’s annual press conference on 10 May 2016: low interest rates, digitalisation and regulation.

The low level of interest rates was not just causing problems for those typically affected, such as life insurers and Bausparkassen, but was making its presence felt in the whole banking sector, said Hufeld. Institutions which primarily based their business models on interest income and maturity transformation were having increasing difficulty generating sufficient income in the long term. The question might sometime arise, according to Hufeld, of how to create a business model in a world in which the traditional interest income might only play a minor role.

The BaFIN statement and excepts of the speech (in German) are available here.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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