Germany financial watchdog sees limited impact of Ukraine war on financial system

Germany's financial stability committee on Monday said the direct effects of Russia's war on Ukraine are manageable for Germany's financial system as a whole as the direct claims of German financial intermediaries against debtors in Russia are small.

"So far there have been no serious malfunctions in the German financial system," the finance ministry said on Monday, citing a report by the committee which includes Germany's central bank, its finance ministry and bank supervisor BaFin.

The report, covering the period from April. 1, 2021, until March 31, 2022, said risks to financial stability were likely to arise particularly if unfavourable real economic developments and an abrupt rise in interest rates coincided.