April, 03, 2010

In a bid to better manage future financial crises, the German government has adopted a corner stone paper for future regulation of the country’s financial markets, including the setting up of a stability fund financed by the introduction of a bank tax.According to the Finance Ministry, as the financial crisis has caused Germany’s banks to falter, new instruments are necessary to enable banks that are in difficulty to restructure or to be managed.

Drawn up by the German Finance Ministry in collaboration with the Ministry of Justice, the paper contains five key elements.Firstly, the creation of a stability fund and the introduction of a bank tax, designed to ensure that the banking industry contributes to the cost of overcoming future financial crises, as well as to the restructuring of systemically important banks. Managed by the Federal Agency for Financial Market Stability (FMSA), the fund will be financed by a special tax levied on all of the country’s banks.

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