Long-term Financing under threat

Prof. Dr. Michael Voigtländer and Heide Haas, Cologne Institute for Economic Research (IW)

Long-term financing plays an important part in calming the markets and thus ensuring the stability of economies. However, the new financial market regulations for banks will cause the market for long-term financing to contract, and other financial intermediaries are unlikely to be able to close this gap.The regulatory framework must therefore be changed to make the bankingsector more robust while simultaneously allowing it to continue to fulfil its original economic functions.