It couldn't have gone much better for the commercial banks at the recent German Banking Congress in Berlin. Chancellor Olaf Scholz (SPD) praised the industry, signalling that the ice age that broke out between politicans and the banks after the 2008/2009 financial crisis is finally over. According to the Chancellor, banks are no longer part of the problem, but part of the solution. But he had more in store. Scholz promised political support for a central concern of the industry: the further development of Capital Markets Union. The topic ran like a thread throughout the Banking Congress. It even dominated panels that were scheduled under completely different headings.

Furthermore, it seems that the entire wishlist of the private sector commercial banks has reached the Chancellor. Even better. He has put them on his to-do list. Scholz pledged to advocate for better conditions for securitisation in Europe, and to reduce the level of bureaucracy in reporting requirements. Full flexibility of capital and liquidity in cross-border transactions is hoped for via Banking Union. These are frequently addressed concerns of the banks. Securitisations allow for better distribution of credit risks, and create room for new lending, but the market in Europe is weak due to post-crisis regulation.

For many years, calls for reform from the banking industry remained unheeded by politicians. The industry is fortunate that Scholz was previously the Finance Minister. It would have been even better if these new insights had arrived while he was in that office.

The new political course is not entirely selfless. Germany's weak growth not only burdens the economy, but also the federal government's balance sheet. The coalition is under pressure to kickstart growth, and there is a federal election on the horizon in October 2025. Weak investment levels and crumbling infrastructure will not fix themselves, and financing is needed. The transformation of the German economy to climate neutrality must also be tackled. Public money cannot accomplish this. The lion's share must come from the private sector. For this, the banking industry needs significantly more room to maneuver. The new political direction shows that the banks have succeeded in rebuilding solid foundations, after the massive loss of trust because of the financial crisis. During the Covid crisis, the credit institutions demonstrated the important role they play in providing credit and liquidity to the corporate sector.

The new political mood is good, but ultimately it is action that counts. However it is promising that Scholz wants to make these projects a top priority, and accelerate them. They are being lifted from expert circles onto the agenda of EU government heads. Recent movement in Brussels on CMU testifies to this. The Chancellor's idea of accepting what might be seen by individual countrfies as second-best solutions— but ones that are harmonized across the EU —suggests that he is genuinely interested in success. Additionally, the fact that he is willing to look at the big picture, but also where necessary take quite small steps, underscores this commitment.

The mood at the Banking Congress in Berlin was relaxed. Finance Minister Christian Lindner (FDP) had been scheduled, but did not appear in person, but via a video message. Lindner had traveled at short notice to Turkey with the Federal President on the occasion of the 100th anniversary of the establishment of diplomatic relations between the two countries. Frank-Walter Steinmeier had an economic delegation with him to honor the achievements of Turkish migrants in Germany. He had invited 100 guests with Turkish roots to accompany him — including Arif Keles, a third generation Berlin resident who runs a kebab shop. Lindner's choice of appointment clearly indicated his priorities.