ABSTRACT
This chapter discusses the regulations and supervisory institutions governing the financial sector in Germany. It presents a general overview of the structure of the financial system in Germany, its main peculiar features, and some key trends of the last decades. The chapter then reviews the supervisory system and its developments. It outlines the key characteristic of the regulation of the financial system, which was put in place after World War II and remained relatively unchanged until around the mid-1980s. It provides the description of the main drivers of change of the system until the outbreak of the financial crisis. The drivers include the domestic initiatives to vitalize German financial markets, the changing role of the German central bank, and later also the role of international and European attempts to harmonize regulation. Capital requirements and deposit insurance are the two particularly relevant types of regulation due to their importance in the public debate.
