Credit risk could flare up again in the future. As the Bundesbank noted in its Financial Stability Review, cyclical vulnerabilities in the German financial system have continued to mount. For instance, the risks stemming from the overvaluation of assets and credit collateral have risen. This is especially true for the residential real estate market.
And other vulnerabilities are continuing to build up in the German financial system as well – for example in the shape of interest rate risk. All in all, now is the time to prepare for the future so that the financial system can perform its functions smoothly even in the event of unexpected developments.