Coalition agreement - aspects for the financial sector

Amongst other topics, the coalition agreement presented by the SPD, the Greens and the FDP on 24 November 2021 contains proposals for the financial sector. We provide you with an overview of the most important proposals. The information in brackets refers to the corresponding line number of the coalition agreement.

Banking Union/Financial Market Regulation

• Complete the banking union and preserve the three-pillar model in the German banking market (line 5696 f.).
• Create a European reinsurance for national deposit guarantee schemes, in accordance with which contributions would be strictly differentiated according to risk. Reduce risks in bank balance sheets, further strengthen the resolution regime and preserve the institutional protection of savings banks and cooperative banks. Rejection of a full communitisation of deposit guarantee schemes in Europe (line 5701 f.).
• Deepen the Capital Markets Union (line 5713 f.) by, amongst other things, reducing differences in insolvency, tax, consumer protection, supervisory and company laws at the EU level (line 5713 f.).
• Strengthen market transparency by revising the MiFID/MiFIR financial market rules to counteract the fragmentation of European securities trading (line 5717 f.).
• Implement Basel III/IV with all its central elements, taking into consideration investment-friendly framework conditions (access to ratings and preservation of the SME factor). Systematic evaluation of the capital relief introduced during the COVID 19 pandemic to assess whether, and to what extent, the relief can be maintained (line 5729 f.).
• Proportionality of banking supervision and regulation. Reduce competitive disadvantages for smaller banks. Appropriate regulation and substantial relief (SREP process, reporting) for very well capitalised small and medium-sized banks with low-risk business models (line 5729 f.).
• Appropriate regulation and supervision of "shadow banks" and support for the work of the Financial Stability Board (line 5745 f.).
• Limit distortions caused by high-frequency trading by means of appropriate market rules. Limit speculation with respect to food through the lowering of position limits at a European level (line 5749 f.).
• Continue the reform of the German financial supervisory authority, BaFin. Stronger standardisation of the preparation of prospectuses. Further strengthening of BaFin’s competences in the examination of prospectuses relating to asset investments (line 5754 f.).
• Mandate BaFin to identify regulatory gaps in the grey capital market (line 5767 f.).
• Decouple the conclusion of the insurance contract and the credit contract for residual debt insurance by at least one week (line 5769 f.).

Anti-money laundering

• Develop a coordinated strategy between the Federal Government, the Federal States (Länder) and the EU to combat money laundering and review responsibilities. Swiftly implement possible recommendations from the FATF German audit into German law. Transfer money laundering supervision of obliged entities that are particularly close to the financial market to BaFin. Build up the necessary information and knowledge base for the ongoing evaluation and improvement of the effectiveness of the fight against money laundering in Germany (line 5790 f.).
• Advocate at the EU level for the transfer of the central money laundering rules into a regulation (line 5802 f.).
• Advocate for an effective and independent EU money laundering authority based in Frankfurt am Main, as proposed by the European Commission. The competences of the EU supervisory authority should be the traditional financial sector and the prevention of the misuse of crypto assets for money laundering and terrorist financing (line 5802 f.).
• Strengthen the FIU by equipping it with all powers under the rule of law and access to all necessary information. Position liaison officers from the state criminal investigation department in the FIU and improve the risk-based approach. (line 5810 f.).
• Improve the quality of data in the transparency register so that beneficial owners are identified in all prescribed cases as well as digital linkage with other registers existing in Germany (line 5821 f.). Insurance Review Solvency II against the background of strengthening the European insurance market, inter alia, by taking climate risks adequately into account (line 5853 f.).

ESG

• Develop an industrial strategy that is embedded in a European solution in conjunction with the European "Green Deal" and prevents carbon leakage through appropriate measures (line 745 f.).
• Create suitable instruments for achieving the climate targets, for example Carbon Contracts for Difference and the introduction of a Europe-wide effective CO2 limit compensation mechanism or comparably effective instruments (line 745 f.).
• Establish a transformation fund at KfW and use Climate Change Contracts for Difference (line 2095 et seq.).
• Expand green bonds (line 5477 f).
• Advocate European minimum requirements in the market for ESG ratings and the mandatory inclusion of sustainability risks in credit ratings of the major rating agencies (line 5777).
• Support the project of a "Corporate Sustainability Reporting Directive" of the European Commission (line 5784).
• Implement a Sustainable Finance Strategy based on the recommendations of the Sustainable Finance Advisory Council (line 5786).
• Exploit the potential of digitisation for greater sustainability – for example, by promoting digital twins (virtual models for analogue products) and the climate neutrality of German data centres (line 504 f.).

Tech/Digitalisation

• Reduce barriers to digitalisation (German law requirement for written form, etc.) by means of general clauses and standardisation of terms/definitions (e.g. "income") (line 406 f.).
• Introduce effective and speedy authorisation procedures for FinTechs and create a legal framework for digital financial services without media discontinuities (line 5833 f.).
• Extend the possibility of issuing electronic securities to shares (line 5835 f).
• Constructively support the introduction process of a digital euro (line 5837 f.).
• Create an independent European payment traffic infrastructure and open interfaces for barrier-free access to digital financial services for consumers and traders (line 5837 f.).
• Common European supervision in the crypto area and obligation of crypto asset service providers to consistently identify the beneficial owners (line 5849 f.).

Start-up promotion

• Strengthen the state development bank, KfW, as an innovation and investment agency and as a co-venture capital provider (especially for AI, quantum technology, hydrogen, medicine, sustainable mobility, bioeconomy, and circular economy) (line 908 f.).
• Enable private capital from institutional investors, such as insurance companies and pension funds, to be mobilised for start-up financing. (line 911 f.).
• Open the venture capital market to institutional investors and complement the German financing landscape via a flexible modular design of the future fonds (Zukunftsfonds) (line 5323 f.). Facilitate IPOs and capital increases and create the possibility of issuing shares with different voting rights (dual class shares) for growth companies and SMEs (line 5726 f.).

Consumer protection

• Stronger focus on the individual circumstances of consumers when granting loans to them (line 3754 f.).
• Limit the costs of early repayment fees to what is reasonable as well as fair access to a basic account and creating transparency (line 3758 f.).
• Bundle regulatory supervision for debt collection agencies (line 3760 f.).