The German financial system is stable and over the past years its resilience against adverse shocks has markedly improved. Moreover, the universal banking model – a characteristic feature of the German financial system – has proven its robustness and stability.
These structural achievements will help to cushion current tensions due to higher perceived counterparty risk and a necessary unwinding of positions on the market for credit risk transfer – both unavoidable outcomes in the face of an insolvency of one of the major market participants.