FINANCIAL WORLD | WORKING PAPERS
Failure and Need for Reform of German Financial Supervision
by Martin Hellwig & Gerhard Schick
PUBLISHED13. JANUARY 2022
The German financial supervisory authority was not subjected to any comprehensive reform after the 2008 financial crisis, although its mistakes in the run-up to the financial crisis were obvious and the bank bailouts cost the taxpayers more than 80 billion euros. Subsequent scandals have not prompted any significant reforms either. The reaction to the Wirecard scandal was also insufficient We outline undesirable developments and supervisory failures of these two decades and attribute them to the political and legal framework conditions as well as the self-image and working methods of supervision. The framework conditions, working methods and self-image must be fundamentally reformed. To this end, we present various proposals for greater independence and transparency, for better enforcement possibilities and for more professionalism.