The frequent claim that German investors are risk-shy and prefer fixed-yield paper has been emphatically refuted over the past few years. The - in some cases meteoric price increases on the “Neuer Markt” have, if anything, given rise to the fear of widespread euphoria leading to a lack of discernment.
I have focused today on the benefits of the Fed’s supervisory role for its other central bank responsibilities, but the reverse is also true: The Fed’s non-supervisory activities help it to be a better supervisor, which in turn promotes financial stability.