The deposit-taking entity may continue to engage in market-making, though. The law would also tighten the restructuring regime, sharpening resolution planning and bail-in provisions. The government intends to pass the bill before the summer break which is still possible. The bill does not require Bundesrat consent but the second chamber now controlled by the opposition may delay and ultimately derail decision-making before the elections on September 22.
In any case though, the legislative proposal is best seen as yet another salvo in the government’s strategy to steal every idea of the opposition on financial regulation, making them devoid of election themes. This kind of political scheming can explain, alongside other factors, why, contrary to expectations, financial regulation has not emerged as a major election theme. Barring a new scandal, this will probably remain the case, with regulation meanwhile being tightened unabated.
It is unclear whether the legislative proposal will still enter into force before the election, as the ruling coalition no longer has a majority in the Bundesrat (second chamber) and the opposition parties could therefore delay legislation. The bill, however, does not require consent, and the SPD and the Greens do not have a veto on it. Tactical delays would not be without risk though, as the government would then be able to accuse the opposition of standing in the way of tougher regulation, which, in essence, the opposition itself wants to see implemented.
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