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Kreditwesengesetz

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Kreditwesengesetz

The German Banking Act Kreditwesengesetz (KWG) literally means law of the banking system, is the primary legally implementation of the Basel Accords. It is binding for banks and other institutes providing financial services (German: de:Kreditinstitute und de:Finanzdienstleistungsinstitute) in Germany and effective since January 1935, but updated in 1962.

Purpose

The main goals of the KWG are:

  • To guarantee and safeguard the functionality of banks (literally in German: Sicherung und Erhaltung der Funktionsfähigkeit der Kreditwirtschaft)
  • To safeguard the creditors from losing their invested capital, i.e. any kind of share (literally in German: Schutz der Gläubiger von Kreditinstituten vor Verlust ihrer Einlagen)

    • The Kreditwesengesetz imposes restriction on risk-related business activities and extends the duty of disclosure. It ensures competences of regulators and is the legal justification of the German Solvability Directive (SolvV) and MaRisk, the corresponding regulation with more detailed definitions and requirements.

    References

    Kreditwesengesetz Wikipedia
    (Text) CC BY-SA


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