3  BIS Review 77/2000  Germany sometimes has difficulties with reforms. In a federally structured state with numerous strong interest groups, that comes as no surprise. It is therefore all the more gratifying to state that - despite all the criticism of specific points - a tax reform has been initiated which deserves the name.
This is even more important as increasing firm-specific risk may require larger portfolios and a greater range of exposures than before. Another fundamental issue is that technological change challenges the reliability of backward-looking indicators (such as default histories) for credit risk assessment.