The role of capital markets in Germany - Five questions on the state of play, current opportunities, and themes for the future
20 March 2024
This study, published in partnership with zeb Consulting, shows the potential that stronger financing via capital markets offers for Germany.
The Association for Financial Markets in Europe (AFME) has today published a new report on the role of capital markets in Germany.
Among the key findings, the report shows that for decarbonisation efforts alone, the bar is set very high in Germany. The German government has committed to reducing greenhouse gas emissions in Germany by at least 65% by 2030, compared to 1990 levels, under the Climate Protection Act.
Key findings:
- Germany is lagging behind other countries with respect to capital markets financing.
- German companies rely almost exclusively on bank loans while households still avoid capital markets for investing and retirement provision.
- There is an annual funding gap of EUR 175 billion needed to achieve the German government’s ambitious climate targets by 2030.
- There are increasing signs views are changing with respect to the role of the capital markets in the German financial system.
- In Germany, the proportion of capital market instruments is significantly lower than in other countries, however, an equity culture is growing among young investors in Germany.
- The German statutory pay-as-you-go pension system is beginning to falter in the face of an ageing society. To address this challenge, a pension scheme, partly based on capital markets funding, will be essential in the future.
- Capital markets could help to finance future investments in Germany, including via new sources of financing, such as securitisations.
AFME
© AFME
