What is BaFin? BaFin Review, Features

The German Federal Financial Supervisory Authority (BaFin) integrates the Federal Banking Supervisory Authority, the Federal Insurance Supervisory Authority and the Federal Securities Supervisory Authority, representing a fully integrated regulatory model.

About Germany’s Federal Financial Supervisory Authority (BaFin)

The previous offices of the Federal Banking Supervision (BAKred), the Federal Insurance Supervision (BAV), and the Federal Securities Supervision (BAWe) are integrated into a single financial regulatory agency and integrate the functions of supervising the banking, financial services, and insurance services industries. The Federal Financial Supervisory Authority (BaFin) is a federal agency, which is governed by the Minister of the Federal Ministry of Finance through public law. It has legal characteristics. The two offices are located in Bonn and Frankfurt, with about 1,000 employees. The Federal Financial Supervisory Authority (BaFin) supervises 2,700 banks, 800 financial service institutions and more than 700 insurance institutions. The new German financial regulatory system is obviously conducive to information exchange between regulatory agencies, synergy between organizations, strengthening Germany's position as a financial center, and consolidating its position and role in international finance.

Purpose of work

An important feature of Germany's financial supervision is that it relies on non-governmental forces to supervise banks, and rarely uses direct government supervision measures. While relaxing the supervision of the financial industry, it has also strengthened the supervision of the financial industry. The German financial regulatory authorities have relaxed the control measures on the source of funds, business scope, operating area, interest rate level, etc., while strengthening the supervision of the financial industry from the overall and macro aspects. It has achieved the transformation from routine supervision to risk-based supervision, attaches importance to the construction of internal control system, and emphasizes the role of market mechanism to prevent financial risks and achieve the supervision goal of giving equal importance to safety and efficiency.

Regulatory responsibilities

1. Review of market access

The Federal Financial Supervisory Authority is responsible for the qualification review of newly established institutions in Germany, including the minimum capital, qualification review of senior personnel, etc., and issuing business licenses;

2. Inspection of the company’s daily operations

The Federal Financial Supervisory Authority mainly reviews the company's own capital, liquidity and high-risk business links. For example, the amount of a company's own capital must be maintained above the proportion stipulated in the Basel Accord; the liquidity of the company's assets must be maintained above the prescribed proportion to ensure sufficient payment capacity. Due to the large number of financial companies in Germany, the agency's review mainly relies on social economic audit companies and related computer systems to automatically check the data submitted daily by the central bank.