Although corporate financing via capital markets is on the rise, Germany’s financial system
remains mostly bank-based, with bank loans the predominant form of funding for firms,
particularly the small and medium sized enterprises of Germany’s famed Mittelstand. Credit is
available at market-determined rates to both domestic and foreign investors, and a variety of
credit instruments are available.
Legal, regulatory and accounting systems are generally
transparent and consistent with international banking norms. Germany has a universal banking
system regulated by federal authorities and there are no reports of a shortage of credit in the
Since 2010, Germany has banned some forms of speculative trading, most
importantly “naked short selling.” In 2013, Germany passed a law requiring banks to separate
riskier activities such as proprietary trading into a legally separate, fully capitalized unit that has
no guarantee or access to financing from the deposit-taking part of the bank. Germany supports
a worldwide financial transaction tax and is pursuing the introduction of such a tax along with
several other Eurozone countries.