German Landesbanks: Limited guarantees

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The Landesbanks, the central banks of the German regions, have traditionally used their state guarantees to borrow money cheaply and in turn lend cheaply. However, a European Commission ruling has forced Germany to abolish the Anstaltslast (maintenance obligation) and Gewährträgerhaftung (guarantor liability) state guarantee mechanisms, which have allowed them to maintain their credit ratings and to refinance cheaply.

“Historically, the Landesbanks have mostly lived on the basis of refinancing ar

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