However, the actual risk exposure here is relatively small, because German banks these days are much better hedged against currency risk than they were just a few years ago.
All in all, then, the expected interest rate reversal in the United States is unlikely to impact strongly on German banks – and it’s not as if the move is coming entirely out of the blue. And that’s a point worth noting, because there are three qualities that are crucial for any exit from an accommodative monetary policy – transparency, predictability and communication.