The “search for yield” fostered the demand for more complex forms of securitisation, which led to the creation of instruments that entailed risks that were difficult to assess and price. No active secondary market existed for many of the new instruments, and the associated opacity of the credit risk distribution made it difficult to keep track of the exposures.
This is somewhat less than in the UK, but it makes clear that – contrary to some popular misperceptions – Germany’s fiscal policy is markedly contributing to stabilising the economy. There is not only a structural adjustment need in the international financial system.