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.