German insolvency plan backfires

Author: | Published: 1 Sep 2009

The German government’s plan to take over potentially insolvent banks threatens contracts with foreign institutions, and could limit the funding that struggling banks can access.

The proposal, put forward by Economic Minister Karl-Theodor zu Guttenberg, would allow the German Financial Supervisory Authority (Bafin) to manage and restructure banks that it considers at risk of insolvency.