The German savings banks came through the financial crisis well. So well, in fact, that savings banks outside the country are considering copying the German system.
Georg Fahrenschon, the former finance minister of Bavaria and current president of the German Savings Bank Association, certainly considers the German model an export worthy commodity. He’ll take his message to Oslo at the end of the month, where he is pleased to have been invited to speak at the 100-year celebration of the Norwegian Savings Banks Association.
In November, the European Central Bank will take over supervision of the large banks in the euro zone. Are you sure they will be sound banks?
I am an optimistic person by nature. From the German point of view, we have seen the consequences of previous mistakes in the last four years. In addition, a stress test is now being conducted that should ensure that only solid institutions will be taken under supervision.
Isn’t this stress test a waste of time, since the ECB is encouraging institutions to take risks through low interest rates?
There are surely certain risks in that direction. This also illustrates the institutional problem of the ECB. From now on, it is not only responsible for monetary policy, but soon will be the highest bank supervisor. It will be two-faced, so to speak.
Which danger does this dual role hold?
For example, the ECB continuously injects more liquidity into the market and it shouldn’t be surprised when in parts of Europe, banks plug their own holes with it.
Do you believe that distorts the current stress test?
There are also contradictions in the stress test. The institutions will be treated differently. Banks that are already on the ECB’s drip will have an advantage. But healthy (banks), will be scrutinised, with the philosophy “You look so healthy, something must not be right there.”