250th anniversary of the Pfandbrief: Interview with Bettina Stark-Watzinger
Just as the term "hidden champion" is used for medium-sized companies which remain unknown to the general public, yet are world market leaders in their field, I would also describe the Pfandbrief as the "hidden champion" of the financial market. Its 250-year success story can be attributed to its stability-oriented features: the Pfandbrief is embedded in the real economy, takes a long-term approach and offers secure returns.
The success of the Pfandbrief also teaches us the value of good and appropriate regulation. In 1769, Frederick the Great issued a decree that would lay the foundations for the success of the Pfandbrief. The German Mortgage Bank Act (Hypothekenbankgesetz) of 1900 and the German Pfandbrief Act (Pfandbriefgesetz) of 2005 take their place in a chronology of laws that have allowed the Pfandbrief to spread and develop. Both investors and banks benefit from its clearly formulated legal framework.
From its underpinnings in the real economy, given its role in funding mortgages, we can see how the Pfandbrief directly benefits citizens. It indirectly helps people to obtain loans on favourable terms, thus allowing them to buy their own property. Hence it is a vital part of our market economy, albeit one seldom noticed by the general public.
I would like to wish the Pfandbrief all the very best for the next 250 years.