Tuesday, March 30, 2010

OECD Questions German Banking

Strange. We have countless Germans delivering stern lessons on fiscal probity to the rest of Europe, and yet we also have this from the OECD:

In its 2010 survey on Germany, published Friday, the O.E.C.D. said German banking practice “exposes German banks relatively more to unexpected shocks than banks in other countries.”
As part of the explanation, it wrote, “German banks exhibit one of the highest absolute leverage ratios as they carry large volumes of assets to which they attach low risk.” Extrapolated into everyday language, that points to an inadequate pricing of risk, which is no way to run a safe banking system.

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