Policy portal Stability & Supervision

When trust in the financial system disappears, panic sets in: fire sales of financial assets and bank runs can make the entire system collapse. Taxpayers are forced to bail out “too-big-to-fail” institutions to protect essential economic functions (deposits, credit, payment systems).

Mitigating implicit “moral hazard” requires sound prudential policies protecting essential banking services from excessive risk-taking and maintaining adequate capital levels to cover possible losses. Well-resourced, and independent supervision is also key. Finally, prudential regulation must also respond to new risks related to digitalisation (see “Digital Finance”) and climate change (see climate risk under “Sustainable Finance”).

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Speech at the Public Hearing on Brexit and its potential impact for Lower Saxony

Hanover, 3 May 2018 – Statement by Prof. Rainer Lenz, Board director at Finance Watch at the Public Hearing of the Ausschuss für Bundes- und Europaangelegenheiten und Regionale Entwicklung des Niedersächsischen Landtages on “Brexit and its potential impact for Lower Saxony”.

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