Non-final working translation 

The global economy was shaped by trade disputes in 2025. The announcement by the new US Administration of its intention to sharply tighten its tariff policy as well as the clear steps taken in this direction caused significant unrest in international politics and on the financial markets last spring. Nevertheless, the global economy proved robust. Global trade grew further, although there were regional shifts in some trade flows.

A widespread escalation of trade disputes was able to be avoided successfully. A trade agreement between the United States and the United Kingdom was followed by agreements with Japan, China, and, at the end of July 2025, the EU. As a result, while tariffs on US imports rose significantly, the increases were considerably smaller than those announced in the spring. US imports nevertheless fell markedly. In terms of global trade, however, this negative effect was offset to some extent. This was due, amongst other things, to the buoyant trade in high-tech goods within the context of the AI boom. 

According to assessments by the International Monetary Fund (IMF) , the global economy grew at an unchanged rate of 3.3 % last year. Similar growth is expected for the current year. Although protectionist measures are set to continue to weigh on the global economy, the lively investment activity in the technology sector and the expansionary fiscal and monetary policy in many regions are likely to counteract these contractionary influences. At the same time, the risk of escalation in trade policy conflicts has not been eliminated entirely. Further measures that restrict imports or exports could disrupt supply chains, curb the propensity to invest, and slow down growth in productivity.

Global consumer price inflation continued to abate last year. Consumer prices in the advanced economies rose by 2.5 % in December 2025. One year earlier, the inflation rate in these countries was still 2.8 %. By contrast, underlying inflation excluding energy and food prices – known as core inflation – fell markedly. The core rate was 2.5 % in December 2025, down from 3 % twelve months prior. On an annual average, the headline inflation rate in the advanced economies declined only marginally in 2025. According to IMF assessments , the inflation rate will decrease to a slightly greater extent this year. The US economy, however, in which the tariff increases are expected to be gradually passed on to consumers, is likely to be one of the exceptions. This is likely to push up prices further there.

Following two successive years of recession, the German economy remained sluggish in the period under review. According to figures from the Federal Statistical Office, economic activity in Germany picked up slightly by 0.3 % in calendar-adjusted terms. Owing to the strong export orientation of the German economy, the cyclical weakness was driven not least by the increased US tariffs, the appreciation of the euro, and high competitive pressure from China in particular. Growth was also dampened by political uncertainty. Private consumption, which was boosted by a further sharp rise in wages, contributed positively to the increase in GDP. The German economy is likely to recover slightly this year. According to the Bundesbank’s latest Forecast for Germany, economic output will increase by 0.6 % in calendar-adjusted terms. 1 The expansionary fiscal policy is likely to increasingly support economic activity. In addition, private demand is set to pick up.

Germany’s weak economic growth is also structural in nature. The factors here include high regulatory and bureaucratic burdens, demographic challenges, and high labour costs on top of increased competition on the global markets. The requisite transition to a climate-neutral energy supply also entails costs. These negative factors have contributed to a reduction in investment activity in Germany over recent years. Furthermore, the competitiveness of the domestic export industry has decreased significantly. Various policy measures have been adopted to strengthen economic growth. Through decisive structural reforms in multiple areas, it is possible to put the German economy back on a higher path of growth. 2 Above all, it is crucial to reduce obstacles to the supply of labour, lower the costs of bureaucracy, speed up administrative processes, limit the rise in social contribution rates, and shape the energy transition in a cost-efficient manner.

Inflation in Germany declined further last year. According to the Harmonised Index of Consumer Prices (HICP), the average inflation rate last year amounted to 2.3 %, down from 2.5 % in 2024. There was a slowdown in the rise in food prices, in particular. Energy prices fell further. However, the core inflation rate, which was driven by sharp price increases in the services sector, remained above the headline inflation rate. Nevertheless, the core rate also fell in Germany, from 3.2 % on average in 2024 to 2.8 % in 2025. According to the Bundesbank’s Forecast for Germany from December 2025, inflation is likely to decrease further this year to an average of 2.2 %. The fact that price pressures are easing only slowly is due to the continued strong wage growth. Furthermore, energy prices are no longer likely to decline as sharply.

Economic output in the euro area increased considerably last year. According to preliminary data from Eurostat, GDP in the Member States rose by 1.5 %, which is significantly more than in 2024, when aggregate output grew by 0.9 %.

Although the tariff and trade agreement between the EU and the United States has reduced uncertainty, the additional tariffs are likely to continue to dampen economic output in the euro area. Overall, the average US tariff on imports from the EU is likely to have risen from 1.5 % prior to the trade dispute to around 14 %. 3 Furthermore, the euro appreciated markedly against the US dollar. This will additionally weigh on exports to the United States. Economic output in the euro area was supported by moderately rising consumer demand as well as the continued dynamic development of information and communication services and various business-related services.

Inflation in the euro area decreased further last year. According to the HICP, the inflation rate fell from 2.4 % on average in 2024 to 2.1 % in 2025. It was thus largely consistent with the Eurosystem’s medium-term target of 2 %. The inflation rate declined across the board. This was helped by the slightly smaller increase in the prices of food and, above all, the lower core inflation rate. Core inflation decreased from 2.8 % to 2.4 % on an annual average. The services sector, in which price pressures abated gradually over the course of the year, also contributed to this. According to the latest assessments by the Eurosystem , the decline in the core inflation rate will likely continue somewhat further. Coupled with an initial further fall in energy prices, this could temporarily push the HICP rate slightly below 2 % this year and next.

In view of the favourable development of inflation in the euro area and an equally favourable forecast, the ECB Governing Council has ended its easing of monetary policy for the time being. In 2024, the ECB Governing Council carried out four interest rate cuts of 0.25 percentage point each. The deposit facility rate, which is of relevance for monetary policy, thus fell by one percentage point to 3 % by the end of 2024. Four additional interest rate cuts followed last year in February, April, May and June, respectively. The deposit facility rate thus reached 2 % last summer. From mid-2025 onwards, the inflation rate remained close to the Eurosystem’s target of 2 %. This was in line with previous assessments by the ECB Governing Council. Other inflation and economic data also indicated that the inflation rate would likely settle around the Eurosystem’s inflation target in the medium term. In light of this favourable development, the ECB Governing Council repeatedly decided to keep the key interest rates constant in the second half of 2025. At this level, they will likely neither boost nor curb inflation. The ECB Governing Council also refrained from taking any further interest rate steps at its first monetary policy meeting in 2026.

The Eurosystem continued to reduce its balance sheet at a gradual, moderate pace last year. The Eurosystem has not reinvested any asset holdings under the pandemic emergency purchase programme (PEPP) since the end of 2024. Reinvestments under the asset purchase programme (APP) were discontinued in the summer of 2023. In the year under review, APP asset holdings declined by an average of almost €28 billion per month. The PEPP portfolio decreased by almost €15 billion per month on average. Overall, the Eurosystem’s monetary policy asset holdings shrank by €538 billion in 2025 and thus slightly faster than in the previous year. The downsizing of the Eurosystem balance sheet is likely to continue this year. The Bundesbank considers a leaner central bank balance sheet to be desirable, as it allows for more market activity and opens up a larger operating framework for implementing monetary policy in the future.

The cycle of interest rate hikes that began in 2022 has also affected the profitability of the central banks within the Eurosystem, not least including the Bundesbank. The reason for this is that the monetary policy asset holdings, which largely comprise government bonds, have significantly longer maturities than banks’ short-term deposits held with the Eurosystem. While long-dated government bonds generate low interest income, the interest expenditure for commercial banks’ deposits has risen with the key interest rates. This continues to weigh on profitability. The Bundesbank had already reported a loss for the year in 2024. This was again the case in the period under review, though the loss was smaller. Questions and answers concerning this can be found in the following supplementary information entitled “Frequently asked questions about the Bundesbank’s balance sheet risk”.

The Eurosystem reviewed its monetary policy strategy last year. This took account of the lessons learned from the period of high inflation over the past few years. Specifically, the Eurosystem supplemented its monetary policy strategy with three points. First, particularly forceful or persistent action is to be taken in response to large, sustained deviations of inflation from the target in either direction. Second, the review emphasised the necessity of developing and deploying monetary policy instruments with sufficient flexibility to be able to respond to abrupt changes in the inflation environment in a timely and appropriate manner. Third, the ECB Governing Council made it clear that risks and uncertainties, and not just the most likely future course of inflation, should also be taken into account in monetary policy decision-making. The amended strategy will also help the ECB Governing Council to maintain price stability in the euro area in times of major global turbulence.

Last year, the government deficit ratio in Germany stood at 2.7 % and thus remained unchanged compared with 2024. Both government expenditure and government revenue increased significantly. On the revenue side, the contribution rates for statutory health insurance and long-term care insurance rose considerably. In addition, tax-free and social contribution-exempt inflation compensation bonuses were discontinued at the end of 2024. These special payments exempted from tax and social security contributions were thus no longer possible in the period under review. Furthermore, tax revenue also increased significantly due to one-off developments. Receipts from withholding tax on interest income and capital gains and from inheritance tax are particularly noteworthy in this regard. There was strong growth in expenditure across the board. This ranged from spending on pensions, healthcare and long-term care through to personnel, investment, and interest expenditure.

The government debt ratio in Germany is likely to have increased slightly last year. It reached 63 % in the third quarter and may have been at a similar level at the end of 2025. This was up from 62.2 % at the end of 2024. 

Germany’s debt brake was eased significantly in March 2025. Central government has since had unlimited borrowing scope for defence and security-related expenditure exceeding 1 % of GDP. The new special fund for infrastructure and climate neutrality has a borrowing limit of €500 billion outside of the debt brake. Lastly, state governments are now permitted to plan for loans amounting to 0.35 % of GDP annually (currently €15 billion) to finance structural deficits. Against this backdrop, Germany’s government deficit ratio is therefore likely to rise considerably over the next few years. According to the Bundesbank’s most recent Forecast for Germany, it will increase to 4 % this year. It will then increase further provided there is no change of course. As a result, the debt ratio will rise continuously, too.

Owing to the major challenges in defence and infrastructure, temporarily higher deficits are justifiable. However, they must not become a permanent state of affairs. Higher deficits are manageable on a temporary basis due to Germany’s comparatively low debt ratio. They are also compatible with EU fiscal rules. Looking ahead, however, the deficits and debt ratio will have to fall again. This is stipulated by the EU rules. Furthermore, it is crucial that Germany complies with these in order to ensure a stability-oriented monetary union. However, this is also important so that Germany can maintain sound public finances and contain its interest burdens.

The Bundesbank therefore recommends reforming the debt brake in three stages. 4 The aim is to ensure sound public finances and government investment as well as take account of EU rules. In the current, initial stage of the reform, the borrowing ceilings remain unchanged for the time being. However, borrowing is focused to a greater extent on defence and infrastructure. This stage could run until 2029. In the second stage, central government would increasingly fund defence spending from ongoing revenue. The general government structural deficit ratio would steadily decrease towards 1 %. The third stage would begin from 2036 and then go on indefinitely. Alongside a borrowing scope of 0.8 % for additional investment, central and state governments would be granted non-earmarked structural scope for borrowing. This would amount to 0.1 % of GDP if the debt ratio is above the EU benchmark of 60 %. It would increase to 0.35 % of GDP if the debt ratio is below 60 %. Additional reform elements would, amongst other things, support steady fiscal policy.

The situation surrounding public finances in the euro area remained tense last year. According to the latest projection of the Eurosystem , the high deficit ratio decreased only marginally to 3 % from 3.1 % in the preceding year. Accordingly, the debt ratio increased further, climbing from 86.6 % in 2024 to 87.3 % in 2025. The debt ratios in certain euro area countries are significantly higher and, in some cases, rose to a greater extent as well.

Additional fiscal leeway is necessary due to the military threat from Russia and the changed geopolitical situation. In order to be able to rapidly strengthen Europe’s defence capabilities, the European fiscal rules are, by way of exception, allowing expenditure limits to be exceeded. For this reason, too, the government deficit ratio in the euro area is likely to rise perceptibly again in the coming years, while the debt ratio increases further. On top of this, there is also additional borrowing at the EU level. This is for funding loans to EU Member States under the Security Action for Europe (SAFE) programme as well as to Ukraine.

At the same time, it is important to prevent the security structure from being weakened by doubts about the long-term sustainability of public finances. It is therefore crucial that Member States adhere to their spending plans. Furthermore, the additional borrowing for increased defence expenditure must be limited in terms of its duration, amount and purpose. This was taken into account in the national escape clause of the Stability and Growth Pact. This applies equally to the EU lending programmes. These are only suitable for clearly limited projects due to legal requirements, too. Ultimately, sound public finances relieve monetary policy and simultaneously create the foundation for sustainable growth. 

Increasing geopolitical tensions are impacting not only the economy, monetary policy, and fiscal policy. They also pose a challenge to the Bundesbank’s other external core services. The ability to ensure a stable supply of cash even under adverse conditions is thus gaining importance. Regardless of whether normal business life is impaired by a geopolitical conflict, cyberattack or extreme weather event, cash almost always works, even in the event of power or network outages. Central banks are in constant dialogue with one another about insights from previous crises. 5 The Bundesbank uses the insights gained to make the cash cycle in Germany even more resilient and robust. 

The provision of banknotes and coins to the general public must also be fully safeguarded in times of emergency and crisis. For this reason, the Bundesbank held a joint workshop with the Federal Office of Civil Protection and Disaster Assistance as part of the National Cash Forum 6 with the key parties involved in the supply of cash in Germany. By means of regular crisis exercises, the aim is to test and improve provisions and the exchange of information between the stakeholders in the cash cycle as well as the communication channels envisaged for this.

At the start of 2025, a majority of the National Cash Forum declared itself in favour of rounding cash payments in Germany to the nearest five cents in future. The Federal Ministry of Finance was asked to advocate and push ahead with a statutory rounding rule. The rounding rules are intended to be as consistent as possible throughout Europe. In addition, the National Cash Forum supports using various communication measures to make cash more visible as a means of payment. Furthermore, for the first time, the Bundesbank hosted a series of events in several German cities last year entitled “Bits & Bargeld  – Wie bezahlen wir morgen?”. This series will be continued with further dates in 2026.

Resilience is also of great significance for digital payments in Germany. Cashless payments are increasingly gaining weight, due in particular to the growing use of cards and mobile payments. 7 It is thus accordingly more important to ensure that digital transactions continue to function reliably in crisis situations, too. As part of the Payments forum, the Bundesbank is collaborating with market participants in order to be prepared for incidents and disruptions to communication channels and to make provisions for such situations. A key goal is to maintain payment systems without any major impairment even during short-term infrastructure outages. An important contribution to this could be made by the option of offline processing for card payments at physical retailers.

In order to strengthen resilience and independence in European payment systems, European procedures that meet current needs and expectations must be developed and utilised. A key element is the mandatory requirement since 2025 for credit institutions in the EU to offer instant credit transfers. In this context, instant credit transfers may not cost any more than conventional credit transfers. Instant payments could provide the basis for future pan-European payment processes. These could reduce dependence on providers from outside of Europe in the area of cashless payments. In order to increase security in payment transactions at the same time, payee verification was introduced in October. This compares the name of the payee account against the respective IBAN for all credit transfers in order to prevent erroneous transfers.

Fraud prevention and detection are essential for security in payment transactions. Combatting fraud is a task for society as a whole and it requires the commitment and cooperation of everyone involved. The Bundesbank participates in this work at various levels. In addition, since the end of 2025, key representatives from different market sectors, government ministries, supervisory authorities, and law enforcement agencies have been convening under the chair of the Bundesbank to investigate options for jointly combatting fraud in payment transactions. Groups including experts from various fields are also drawing up specific cross-sector measures to effectively combat fraud in the areas of action identified here.

Last year, the Bundesbank and the Eurosystem continued to collaborate in improving cross-border payments. The aim is to make international credit transfers efficient, secure, and transparent. As part of these efforts, the TARGET Instant Payment Settlement (TIPS) platform is to be opened up to other currencies. Alongside the euro, TIPS currently includes two other currencies – the Danish krone and the Swedish krona. Additional countries intend to use TIPS.

The ECB Governing Council has also decided to continue to push ahead with the ongoing initiatives to link TIPS to other instant payment systems. For instance, the implementation phase for connecting to India’s Unified Payments Interface (UPI) has already begun. In addition, the feasibility of potential connection to Nexus Global Payments is being reviewed. Nexus is a central interoperability hub intended to link the instant payment systems of five Asian countries. Furthermore, in September 2025, the Eurosystem started work on assessing the feasibility of a connection between TIPS and the Swiss Interbank Clearing Instant Payments System. Additional connections are planned to be established over the long term, such as with Pix, the instant payment system of the Banco Central do Brasil.

The Eurosystem Collateral Management System (ECMS) successfully commenced operations on 16 June 2025. Since then, collateral submitted in connection with Eurosystem lending operations has been managed via this new centralised technical platform. The ECMS is largely replacing the 20 previous collateral management systems of the national central banks. It offers monetary policy counterparties uniform access to the management of eligible collateral across all central banks of the Eurosystem. The switch to a single system means that the mobilisation and management of collateral is considerably more efficient. With the ECMS, the Eurosystem has now concluded all of its projects launched under the “Vision 2020” initiative. This initiative modernised and substantially developed the Eurosystem’s market infrastructure in the areas of payment transactions and securities settlement.

The increasing prevalence of instant payments processed around the clock is posing new challenges to financial institutions in managing their central bank liquidity. A trend towards longer operating hours is also emerging from the settlement of trading activities in DLT ecosystems and in connection with the possible launch of a digital euro. The G20 roadmap for improving cross-border payments also takes account of this development. Against this backdrop, the Bundesbank has carried out some groundwork for reviewing how the operating hours of the T2 service in the TARGET system could be extended. This also included analysing the impact on monetary policy, financial stability, and financial supervision. In addition, the Eurosystem publicly consulted market participants. From June to September, they had the opportunity to voice their requirements and limitations concerning longer operating hours in T2. Based on the feedback, the Eurosystem is drawing up a roadmap with short-term, medium-term, and long-term measures for extending operating hours. The results of the consultation will be published in 2026 and discussed in further consultation with the market.

The settlement cycle for securities transactions within the EU will be reduced from two business days to one business day (T+1) in October 2027. The settlement cycle comprises the period between the conclusion of a financial transaction and the final settlement of that transaction. “T+1” means that settlement will take place one business day after the transaction, rather than two as has been the case thus far. This will make many areas of the financial market more efficient. Europe is thus catching up with the settlement cycle in North America, which has been T+1 since 2024. The shortening of the settlement cycle will also involve some adjustments to the European securities settlement hub TARGET2-Securities (T2S). As part of the 4CB provider consortium, the Bundesbank is working hard to provide optimal support for the preparations of the European financial market at this end as well. 8

Central bank digital currency (CBDC) remains an important future topic for the Bundesbank. Together with the European Central Bank, the euro area national central banks are reviewing the introduction of a digital euro for the general public (retail CBDC). As a digital complement to cash, it would enable people to continue to be able to pay with central bank money in an increasingly digital world. Here, it is important to bear in mind that the digital euro is intended to complement and not replace cash. People would still have the option of choosing between physical and digital forms of payment.

The digital euro would represent a strategic investment in the independence of European payment systems. The trend towards digital payments that has been ongoing for some years now and the lack of pan-European payment solutions have entrenched Europe’s dependence on non-European payment service providers. The digital euro would be the first European payment solution that could be deployed reliably from physical retail to e-commerce and throughout the entire euro area. Private payment service providers could also use the digital euro's public infrastructure to make their services more easily available across the entire euro area. This would strengthen competition in European payment systems and promote innovation.

At the end of October 2025, the ECB Governing Council decided to proceed to the next phase of the digital euro project. This step is in line with the call from European heads of state or government to speed up the development of the digital euro. The preceding preparatory phase, in which the technical foundations for the potential issue of a digital euro were laid, has therefore been completed successfully. The Eurosystem has been working on the specific design of the future infrastructure since November 2025. The Bundesbank is participating as one of six national central banks in its development and operation. 

There can be no digital euro without a corresponding legal basis. The European Commission’s draft for an EU regulation governing the introduction of the digital euro is currently being discussed by EU co-legislators. The Council of the European Union agreed on a negotiating mandate at the end of 2025. The consultations in the European Parliament have also entered a new phase with the submission of a draft report. Once the legislative process has been completed, the ECB Governing Council could make a final decision on issuing the digital euro. The Eurosystem aims to be ready to introduce the digital euro by 2029.

While the digital euro, as a retail CBDC, is primarily intended to offer private individuals an additional option for paying with central bank money in an increasingly digital world, wholesale CBDC (wCBDC) is aimed towards the financial sector. In future, it could be used as digital central bank money for transactions between financial institutions and, in doing so, strengthen the resilience, efficiency, and autonomy of the European financial system.

The tokenisation of assets and the use of distributed ledger technology (DLT) are opening up new opportunities for shaping processes in the financial sector in a faster, more cost-effective, and more efficient way. In order to fully exploit this potential, secure and reliable payment settlement is essential. The Eurosystem therefore presented a two-track approach for the development of wholesale CBDC in July 2025. The short-term approach, known as “Pontes”, is aiming to provide a pilot solution by the autumn of 2026. This is intended to enable transactions with tokenised assets to be settled in central bank money. This solution is based on investigations conducted in 2024, in which the “trigger solution” developed by the Bundesbank was also tested. The Bundesbank has successfully argued for key functions of this solution to be integrated into the pilot phase of Pontes. The long-term approach, known as “Appia”, is developing a comprehensive vision for an innovative and integrated financial ecosystem that goes beyond the scope of the existing Eurosystem infrastructures.

Introducing wholesale CBDC could not only enhance the efficiency of the financial system, but also improve its stability. It would, above all, ensure that large-volume DLT-based financial market transactions could be settled in secure central bank money. This means that market participants would have a secure alternative to private-sector solutions such as stablecoins or tokenised commercial bank money. Overall, it would strengthen Europe as a financial centre and could help solidify the international role of the euro. Stablecoins are a form of tokenised money that is already available at present and that poses new challenges for the Eurosystem. For more detailed information, see the next section entitled “Financial supervision and stability”. 

In 2025, risks to financial stability increased owing to trade policy conflicts and ongoing geopolitical tensions. 9 The structural challenges already mentioned are also placing a strain on the German economy and may undermine financial stability. However, stock and bond market valuation levels remain high, meaning that the risk of sudden market price corrections is elevated. 

Cyberattacks, which have intensified in the wake of increased digitalisation and dependencies on digital infrastructure, are also threatening the German financial system. The following supplementary information “Strengthening financial institutions’ digital resilience” outlines current regulations intended to strengthen financial enterprises’ resilience against cyberattacks.

High government debt ratios in some euro area countries pose additional risks to financial stability in Germany. Rising government expenditure will probably lead to higher debt ratios and interest burdens. Financial interdependencies between governments and banks, which are considerable in some countries, as well as the strong links between the German and European financial systems, exacerbate the risks to financial stability.

Risks arising from lending activities at German banks are growing. The non-performing loans ratio rose continuously from the end of 2022 until the end of 2024 and has not declined perceptibly since. Loans to the real estate sector were the largest contributing factor here. Although prices in the commercial property market have stabilised recently, the overall situation remains fragile. Risks of another decline in prices persist. The residential property market is showing signs of recovery as prices and transactions continue to increase.

While banks’ capital base remains sound, resilience should not be overestimated in the current macro-financial environment. Regulatory capital ratios are high. However, systemically important banks' average risk weights remain low, despite the worsened risk situation and rising credit defaults.

The macroprudential measures that have been implemented remain appropriate. These include the countercyclical capital buffer (CCyB) of 0.75 % 10 and the sectoral systemic risk buffer (sSyRB). In May 2025, once vulnerabilities in the residential real estate market had been partially resolved, the Federal Financial Supervisory Authority (BaFin) reduced the sSyRB for loans secured by residential properties from 2 % to 1 %. Given that vulnerabilities persist and the environment is uncertain, the remaining macroprudential scope for action should be maintained.

The Bundesbank is advocating for simplified banking regulation and the promotion of capital market financing through further development of the savings and investments union (SIU). While the reforms introduced in the wake of the global financial crisis have durably strengthened the resilience of the banking system, they have made supervisory requirements more complex. In line with the efforts of the European Commission to cut unnecessary bureaucracy and boost the competitiveness of the European economy, the ECB Governing Council created a High-Level Task Force on Simplification. The Bundesbank actively participated in this task force, contributing its expertise and staff. The task force’s final report, which makes a total of 17 recommendations to the European Commission, was published on 11 December 2025. The Bundesbank’s key concerns are to ensure a fundamental simplification of the capital requirements and greater proportionality. In particular, small, non-complex institutions would benefit from a regulatory framework that is better aligned to banks' size and risk structure. However, this must not compromise the resilience of the financial system, since robust, high-performing capital markets are vital for financing the real economy.

The growing importance of non-bank financial intermediaries (NBFIs) presents a challenge in the area of macroprudential supervision. A lack of data on the degree of interconnectivity amongst NBFIs themselves and with the banking system, especially across national borders, means that the risk assessment is limited in scope. To better assess the risks arising from the NBFI sector, a closer exchange of existing data at the international level is necessary.

Stablecoins are another area that will require monitoring in terms of potential risks to financial stability. The following supplementary information "Stablecoins" tackles this subject. 

The Bundesbank offers central government, the state governments and public sector institutions a range of financial market and investment services. It manages the assets of these institutions, tailoring its services to their respective requirements. It also performs tasks related to the issuance and settlement of securities for central government, the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF). In addition, the Bundesbank conducts price smoothing operations for federal securities and provides other services within the Eurosystem reserve management services (ERMS) framework. In the area of asset management, it acts as portfolio manager for numerous central and state government special funds. This involves investing in both euro-denominated fixed-income securities with high credit quality as well as equities from the euro area and other currency areas. Alongside portfolio management, it offers other key asset management services. These range from individual customer care and analytical support, through to securities trading, independent risk control and reporting, all the way to custody and settlement services. The Bundesbank operates on a not-for-profit basis and provides its services as a fiscal agent; in other words, as a state bank, based on legal requirements, and without charging its own fees.

The Bundesbank continued to expand its financial market services during 2025. In the area of asset management, for the first time, it managed funds for several public sector special infrastructure funds. Furthermore, additional countries and securities that are represented in major share indexes can now be incorporated. Since late 2024, the Bundesbank has also been providing its clients, upon request, with annual reports on the sustainability of portfolios under its management. It also assists its clients with various projects by providing comprehensive analyses.

From late November 2025, users have been able to access the Bundesbank’s online statistical time series via a new “Statistics” subpage . The layout of the familiar range of time series and indicators has been modernised. The Statistics section provides data on topics such as the external sector, financial markets, economic activity and prices, public finances, enterprises and households, as well as national accounts. This change was a vital step in making the technical infrastructure, which now provides public access to 80,000 time series and indicators, fit for the future. The new, clear, modern layout helps users to quickly find, display, generate in graph form and download macroeconomic time series and real-time data, for example.

Over the past year, the Bundesbank has helped reduce bureaucracy in the area of data and statistics. The Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung – AWV) was amended with effect from 1 January 2025. The amendments apply to the reporting obligations for the Bundesbank's external sector statistics. The reporting threshold for capital and payment transactions has been raised from €12,500 to €50,000. Furthermore, the thresholds for the reporting of assets of German residents abroad and of non-residents' assets in Germany as well as for the reporting of claims and liabilities of residents in respect of non-residents have been adjusted. Pursuant to Sections 64 et seq. and Section 66 of the AWV, such stock reports are now consistently required only for holdings of €6 million or above. These measures significantly ease the burden on enterprises and households subject to reporting requirements.

Geopolitical challenges and the need for resilience have already been mentioned several times – the Bundesbank itself must also remain fully capable of performing its duties under exceptional circumstances. In 2025, the Bundesbank was exposed to a persistently high number of cyberattacks. On average, more than 5,000 security-related incidents were recorded per minute. However, no concrete statements can be made about the threat situation based solely on the number of such incidents. Instead, the critical factors are early detection, sound evaluation and effective defences. To this end, the Bundesbank operates a multilayer security architecture. Like many other institutions and financial enterprises, the Bundesbank also carries out simulated test cyberattacks, as described in the supplementary information on strengthening the resilience of financial enterprises. Furthermore, the Bundesbank is systematically strengthening its security and crisis prevention structures. The aim is to establish a resilient overall architecture, covering both technical and organisational aspects, which factors in the rising geopolitical and digital risks. 11

In parallel, the Bundesbank is intensifying its strategic focus on digital sovereignty. This means reducing technological dependencies and ensuring long-term control over centralised digital services. This approach not only strengthens the stability of the Bundesbank’s internal core systems but also supports the functionality of the financial system and national security precautions. By linking together crisis resilience and digital sovereignty, the Bundesbank is laying the foundations that will enable it to meet future challenges robustly and independently.

A further challenge for society as a whole is the transition to climate-neutral, sustainable economies. The Bundesbank is tackling the issue of sustainability from a range of angles. Destruction of nature, climate change and the transformation of the economy towards climate neutrality pose risks to the economic and financial system, thus directly affecting the Bundesbank’s core business areas. Extreme weather events, but also climate policy measures, can affect price levels and the transmission of monetary policy. 12 Over the past year, the Bundesbank has therefore examined topics such as the impact of weather-related factors on output and prices, as well as the effect of energy price shocks on inflation. 13 Losses in productivity and destruction of assets, alongside new regulatory requirements, may impair the solvency of borrowers or lower the value of their collateral security, which may in turn affect the stability of banks and the financial system. To address this issue, the Bundesbank carried out a climate stress test in 2025, amongst other measures. 14  

As its balance sheet may also be exposed to climate and nature-related risks, the Bundesbank is taking appropriate risk management measures to address them. This includes plans to introduce a climate factor to protect the Eurosystem against potential losses in the value of certain eligible assets, or factoring climate-related risks into the credit assessment procedure. 15 The Bundesbank also continuously analyses the impacts of climate policy, climate change and other sustainability-related developments on its balance sheet assets, and publishes selected key metrics from these analyses in its annual climate-related reports. 16  

The Bundesbank cooperates with various organisations worldwide in order to help improve understanding of the risks stemming from climate change and climate policy. At the international level, it is particularly active in the Network for Greening the Financial System (NGFS). In 2025, alongside innovative short-term climate scenarios in which the direct effects of climate change and climate policy on the economy and the financial system are examined, the NGFS published several reports on transition plans for a gradual transformation to climate neutrality, as well as on improving the usability of long-term climate scenarios.

When it comes to its own business activities, the Bundesbank is seeking to minimise negative environmental impacts. 17 Through its environmental guideline, the Bundesbank promotes the sustainable use of finite resources in its own business activities. Successful application of these recommendations is reflected, amongst other things, by the continuous reductions in energy consumption. 18 In terms of the cash cycle, a current study conducted on behalf of the Bundesbank confirms that the circulation of banknotes in Germany has a very small environmental footprint. 19

In 2025, as in preceding years, the Bundesbank sought regular exchange with distinguished international academics. As part of the “Bundesbank Invited Speaker Series“, President Joachim Nagel discussed topics such as the common economic challenges facing Germany and Japan with Hiroshi Nakaso (Chairman of the Daiwa Institute of Research and former Deputy Governor of the Bank of Japan) and households’ inflation expectations with Michael Weber (Mitch Daniels School of Business – Purdue University).

The Bundesbank also organised an international conference as part of the new “Future of Finance“ research area. The conference explored current issues such as crypto-assets, digital bank runs, fintech regulation and non-bank credit channels. The Research Centre also organised an international workshop on stablecoins and crypto-assets. During the workshop, current research findings were presented on topics such as the dependencies between stablecoins and the traditional finance world, the stability of stablecoins in periods of crisis and the possible interactions with central bank digital currencies.

Through its strategy for artificial intelligence (AI), the Bundesbank is setting the course to ensure optimal use of the opportunities arising from this promising assistive technology. With this AI strategy, the Bundesbank has set itself the goal of making AI an integral component of its toolkit so that it can continue performing its statutory duties in an optimal manner.

AI will enable the Bundesbank to further develop its strong analytical capabilities and maintain its capacity to act even in a world of increasingly complex, extensive and dynamic data volumes. In that respect, it will be crucial to ensure responsible and transparent use of reliable AI. Across all areas of activity, fulfilment of the Bundesbank’s statutory duties is the benchmark against which the rationale and scope of AI use is to be continuously evaluated. 

In 2025, many people once again benefited from the Bundesbank’s economic education programmes. Approximately 48,900 people, including just under 28,500 school pupils, attended 1,711 events. On 7 March, a Eurosystem initiative aimed at improving general financial literacy was launched. As part of that initiative, the European financial literacy network was founded, in which the Bundesbank actively participates. The special exhibition “My Money & Me – Are you ready to take on the challenge?”, which opened at the Bundesbank’s Money Museum in Frankfurt am Main in 2025, will also help to achieve the aim of raising financial literacy. In the style of an escape room, the exhibition provides a unique and collaborative gaming and spatial experience centred around the topic of money. Participants need to discuss the financial literacy questions put to them and respond quickly and correctly as a team. Thanks to this exhibition, amongst other things, the Money Museum welcomed 49,700 visitors in 2025. 

As part of its comprehensive modernisation programme “Wandel”, the Bundesbank is optimising its strategy development, steering capacity, process management and organisational structure. The intended changes are to be implemented across all sections of the Bundesbank by the end of 2027. The first business units have already adapted their organisational structure and working methods. For external partners, this will sometimes involve new contact persons and responsibilities. The objective of the programme is to facilitate even faster future responses to complex, changing requirements, thus ensuring that the Bundesbank remains an important and influential part of the Eurosystem and European banking supervision in the coming years.