German Parliament Passes Law Implementing EU Financial Market Directives
Berlin, January 30, 2025 – The German Bundestag (lower house of parliament) has passed a law that implements several EU directives into German financial market law. The law, titled “Gesetz zur Umsetzung von EU-Rechtsakten im Finanzmarkt” (Financial Market EU Law Implementation Act), was approved by a majority vote on January 29, 2025.
The new law transposes the following EU directives into German law:
- Directive 2021/338 (CRD V) – Amends the Capital Requirements Directive (CRD IV) by introducing new requirements for banks and other financial institutions, including stricter capital and liquidity rules.
- Directive 2021/2165 (CRR III) – Amends the Capital Requirements Regulation (CRR) by further specifying the capital and liquidity requirements for banks.
- Directive 2021/2357 (BRRD II) – Amends the Bank Recovery and Resolution Directive (BRRD) by strengthening the powers of resolution authorities and introducing new rules for the resolution of failed banks.
- Regulation 2021/557 (DORA) – Establishes a new framework for the digital operational resilience of the financial sector.
In addition to implementing the EU directives, the law also includes a number of provisions that go beyond the requirements of the EU legislation. These include:
- Measures to strengthen the supervision of financial markets, including increased powers for the German financial supervisory authority (BaFin).
- New rules for the protection of consumers and investors, including stricter limits on conflicts of interest and enhanced disclosure requirements.
- Provisions to promote the development of sustainable finance, including new incentives for green investments.
The Financial Market EU Law Implementation Act is expected to come into force in mid-2025. It will have a significant impact on the German financial sector, by introducing new regulatory requirements and enhancing consumer protection measures.
Background
The EU directives that have been implemented by the Financial Market EU Law Implementation Act were adopted as part of a broader effort to reform the European financial system in the wake of the 2008 financial crisis. The reforms are designed to make the financial system more resilient, transparent, and fair.
The German government has been working on the implementation of the EU directives since they were adopted in 2021. The Financial Market EU Law Implementation Act is the culmination of this work.
Impact
The Financial Market EU Law Implementation Act is expected to have a number of significant impacts on the German financial sector:
- Increased regulatory burden: The new law will introduce a number of new regulatory requirements for banks and other financial institutions. This could lead to increased compliance costs for these institutions.
- Enhanced consumer protection: The law will also introduce new measures to protect consumers and investors. These measures could lead to greater confidence in the financial system.
- Promotion of sustainable finance: The law includes provisions to promote the development of sustainable finance. This could lead to increased investment in green and sustainable projects.
Overall, the Financial Market EU Law Implementation Act is expected to have a positive impact on the German financial sector. It will help to make the financial system more resilient, transparent, and fair.
Gesetz zur Umsetzung von EU-Rechtsakten im Finanzmarkt gebilligt
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