Based on the federal elections of 23 February 2025, the Christian Democratic Union (“CDU”), the Christian Social Union (“CSU”) and the Social Democratic Party (“SPD”) entered into negotiation to form a new Federal German government. On 9 April 2025, they presented their outcome for a coalition agreement which includes the following topics for the financial services industry.
Promotion of unified capital markets regulation
The new government recognizes the importance of improving competitiveness of the European Union (“EU”) in relation to financial services, and that efficient capital markets are essential in this regard. Consequently, a level playing field of financial regulation is considered to be key within the EU, with a clear commitment to refrain from goldplating.
As the international competitiveness also depends on the differing levels of regulation for financial hubs outside the EU, the new government intends to promote the idea of a Commission’s report on international financial regulation and the increasing tendencies towards regulatory arbitrage.
Apart from that, the creation of a secure environment for investments of funds in infrastructure and renewable energy and aim to improve conditions for start-ups shall be supported, in particular through better access to venture capital and tax adaptations.
Promotion of the Banking and Capital Markets Union and the Savings and Investment Union
The new government intends to promote the initiative communicated by the European Commission (“Commission”) on 19 March 2025 to further develop the Savings and Investment Union (“SIU”). Also, the European Banking Union (“EBU”) and Capital Markets Union (“CMU”) shall be enhanced. With respect to the European Deposit Guarantee Scheme (“EDIS”), the coalition agreement supports further development of EDIS, however, by reflecting the three-fold banking system in Germany (savings banks, mutual banks and private banks).
Reinforcement of anti-money laundering efforts in Germany
The coalition agreement envisages the improvement of competences at federal level regarding financial crimes and cooperation among anti-money laundering (“AML”) authorities at state, federal, EU and international level, such as Financial Action Task Force (“FATF”) and the newly-established Anti-Money Laundering Authority (“AMLA”). In addition, loopholes in the existing AML framework shall be closed. This includes the amendments to the transparency register as to prohibit transactions of EUR 10.000 or more for legal entities, if the economic beneficiaries cannot be identified in full.
As part of a stricter AML regime, the coalition further intends to implement a suspicious wealth order to seize assets where it cannot be excluded that they have been acquired in a legal manner. This will also include the development of more effective instruments for confiscation and administrative procedures in this regard.
Promotion of digital payment options
While respecting cash as a payment option, the coalition agreement also points that at least one digital payment option shall be available as payment alternative to foster transaction transparency and combat AML concerns. In this respect, they support the initiative of the digital Euro which is currently developed the European Central Bank (“ECB”) and national central banks as a digital currency, i.e. an electronic equivalent to cash, and, hence, as an additional payment choice.
Promotion of early pension investments
As the pension costs are tremendously increasing, the coalition intends to incentives citizens to make early pension investments on a private basis. In this respect, it proposes to introduce a new “Early Start Pension” (Frühstart-Rente) in 2026. Under this plan, the government will contribute EUR 10 monthly into a private pension savings account for every child aged 6 to 18 still attending an educational institution. This investment will grow tax-free until retirement, and individuals will be able to make additional contributions starting at the age of 18. The funds will remain protected from state access.
This is still far away from a stock pension model. However, conceptually, it resembles the approach by the previous government to a tax-free private pension savings account.
Various
In addition, the coalition agreement briefly touches upon various items related to financial services, however without further specification. This relates to the following subjects:
- regulations governing crypto assets, shadow banks, and the gray capital market are supposed to be reviewed to close any existing regulatory gaps;
- the necessity of cost caps for basic account fees and overdraft interest to ensure market fairness are intended to be examined;
- in the financial advisory sector, both fee-based (independent) and commission-based services are supposed to be maintained; however, supervisory tools should be reviewed in terms of their effectiveness to prevent improper inducements;
- the implementation of a financial transaction tax shall be supported at EU level; and
- as regards the insurance sector, a Solvency II revision is advocated to lower capital requirements for infrastructure projects and venture capital and to eliminate unnecessary national capital buffers.
Forward
