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Banking and Financial Markets

Like the regulatory framework, the structure of the international financial markets influences the development of financial service providers and economies. Scenarios for the future development of the global financial market, and the related opportunities and risks, are a major part of the work of Deutsche Bank Research.

132 Documents
July 2, 2018
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The UK’s exit from the EU will have significant repercussions for the financial industry, notably investment banking. London as the primary European hub is likely to lose its full access to the single market. Currently, financial services exports play a major role for Britain and almost half of them go to the EU. Without the surplus it generates from providing investment banking services to EU customers, Britain’s current account deficit would be 40% higher. Following Brexit and the likely loss of the single European passport, non-EU banks will have to set up or build-out subsidiaries in the EU-27 with own capital, liquidity, corporate governance and fully-fledged operations. This could lead to an additional EUR 35-45 bn of capital being ‘ring-fenced’. This represents a further leg of banking balkanisation with trapped capital, liquidity and resources – profitability will be under pressure and not all EU business models will be viable. [more]
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June 28, 2018
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Analyst:
With the new Payment Services Directive ("PSD 2") of the EU, which entered into force on 13 January 2018, payment services in Europe have become the frontrunner of "open banking". Account holders can request, free of charge, that banks transmit their financial data in digital form to third parties. Furthermore, they can authorise third-party providers to initiate payments from their bank account. Personal data are owned by the data subject – this principle also forms the basis of the new General Data Protection Regulation (GDPR). Under the latter, however, there is no obligation to provide a technical solution through which customers can transmit their personal data to third-party providers in a convenient manner. In contrast to the PSD 2, the GDPR is therefore unlikely to stimulate innovation and competition in payments. In the financial sector, competition will thus be distorted. Banks must grant competitors access to customer data and their payment infrastructure, whereas internet platforms, for instance, de facto retain sovereignty over the personal data of their customers as well as access to their platforms. [more]
3
May 14, 2018
Developments in artificial intelligence and robotics have far-reaching economic and sociopolitical consequences, with some of them already materialising today. Still, the implications of further progress in these fields are not well understood. Economies around the world are likely to be impacted differently by the diffusion of AI technologies and robotics as wealthy industrial countries might increasingly “re-shore” production. To forge ahead and maximise the benefits for economies and societies, a balance needs to be found globally between successfully promoting key technologies and industries and avoiding the risk of rising protectionism and "knowledge wars". As the pace of technological change and the related launch of new business models are unlikely to slow, the ability of the state and regulators to keep pace is challenged. [more]
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March 19, 2018
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The major European banks have seen their revenues stabilise in 2017, and through further cost-cutting and improvements in asset quality, their profitability rebounded strongly to the second-best figure in the past decade. However, banks continued to shrink, and both total assets and risk-weighted assets fell substantially. This helped capital and leverage ratios to reach new record highs, finally laying questions about the sector’s capitalisation levels to rest, at least on aggregate. Large European banks lost ground versus smaller competitors and also remained far behind their US peers, although they were able to catch up somewhat on this front. [more]
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February 15, 2018
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The rise of bitcoin and other cryptocurrencies and the decline in cash payments are the background for a new concept: digital cash issued by central banks. An old academic debate about who creates money and how is resurfacing, but what about the user’s perspective? Why would we use crypto euros? Such digital cash would compete against bank deposits, physical cash and private cryptocurrencies to win over consumers in the areas of payments and savings. [more]
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February 9, 2018
Opinions differ when it comes to bitcoin. Discussions are triggered largely by bitcoin’s spectacular price increasess and are not very informed or nuanced. In this paper we focus on several standard claims, which we will put into context and, if necessary, rectify. This will hopefully help our readers to familiarise themselves with the topic. [more]
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January 23, 2018
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Analyst:
Economic policy uncertainty in Europe has risen to extraordinarily high levels. This stands in stark contrast to conventional measures of financial market uncertainty which are at historical lows. Uncertainty surrounding economic policies has negative spillover effects to the rest of the economy. It tends to be transmitted to capital markets and to result in higher financing costs for companies. Significant cross-country transmission of economic policy uncertainty is observable within the EU, with the UK being a net exporter. In addition, banks could turn out to be a central channel through which economic policy uncertainty is transmitted to the real economy, via subdued lending to non-financial corporations, in particular to SMEs. [more]
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December 15, 2017
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The Basel Committee’s recent agreement on final capital rules for global banks is set to have only limited effect on overall capital requirements, but will impact EU banks more strongly than their peers. In recent quarters, European banks have already strengthened their capital ratios substantially and have become more profitable, thanks to moderately better revenues, lower costs and lower loan losses. Balance sheet size and risk-weighted assets have declined, underscoring the continuing lack of growth momentum in the industry. This might change somewhat next year, as European banks could benefit from the strong performance of the economy via a pickup in lending, which so far has remained sluggish. Further tailwinds from declining loss provisions and falling expense levels are less likely though. [more]
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