In its 2011 Financial Stability Review, for example, the Bundesbank had the following to say, “However, in times of systemic stress, markets cease to make broad-based distinctions because, supposing an exogenous shock actually triggers a systemic crisis, it is almost impossible ex ante to forecast the position of an individual bank.
In such a scenario, the task of restoring confidence is not merely the responsibility of an individual bank but also a call to arms for the system as a whole.” Injections of capital can be one weapon in that cause. Capital adequacy is not everything. But without adequate capital, it all comes to nothing. Capital acts as a substantial internal buffer.