Germany's Federal Financial Supervisory Authority has published its Risks in Focus 2026 report, warning that fragile market conditions, record-high valuations and geopolitical, debt and artificial intelligence-related uncertainties have increased the risk that financial stability will face a severe test. The report identifies six risks for financial firms and three trends reshaping the sector, namely digitalization, sustainability and geopolitical upheaval. For the first time, it also highlights three top risks that directly affect consumers. The authority said supervisory attention in 2026 will focus on rising credit risk at banks and insurers as Germany's weak economy drives more corporate insolvencies and increases non-performing loans. It also pointed to contagion risk from the growing links between banks and insurers and non-bank financial intermediaries through private-debt funds, where German financial institutions provide capital that can leverage foreign vehicles outside the traditional banking sector. On the consumer side, the report flags over-indebtedness tied to consumer credit, especially buy now pay later products and small loans below EUR 200 granted without credit checks, speculative retail investment in crypto-assets amplified by social media and finfluencers, and savings life insurance policies with excessive costs. The report also warns that a loss of stablecoin pegs combined with mass redemptions could trigger bank run-like dynamics that spill from crypto markets into traditional markets. In 2026, the authority will intensify monitoring of credit risk at banks and insurers, closely supervise compliance with consumer credit requirements, expand consumer information efforts and step up oversight of crypto providers. Its response to crypto-related risks will also include warnings about dubious firms and continued consumer education.

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