Germany’s central bank said risks and vulnerabilities in the country’s financial system were growing and the economy had contracted in the third quarter after the longest expansion since reunification. The Bundesbank, which has been under pressure to take more aggressive action against banks that are too big for their own good, also cut its growth forecast for this year from 1.6 percent to 1.2 percent. Asset prices, particularly in the property market, have risen during the expansion but the bank said urgent measures for the sector were not needed.
Germany’s central bank said risks and vulnerabilities in the country’s financial system were growing and the economy had contracted in the third quarter after the longest expansion since reunification. The Bundesbank said banks might not have sufficient safeguards to cope with a downturn if it came with defaults, repricing and interest rate changes. Asset prices, particularly in the property market, have risen during the expansion but the bank said urgent measures for the sector were not needed.