With the revised Alternative Investment Fund Managers Directive (AIFMD II), adopted by the EU in April 2024, loan funds have been established as a permanent feature of the European financial market. Member States now have until April 2026 to transpose the provisions into national law. To this end, the German Federal Ministry of Finance (BMF) has published a draft bill on the Fund Risk Limitation Act (Fondsrisikobegrenzungsgesetz) – nitiating the national implementation of AIFMD II while also addressing other financial market issues.
Objectives of the Draft Legislation
The draft bill pursues key objectives aimed at making the financial market in Germany and Europe fit for the future:
- Harmonisation of rules: The BMF largely adopts the EU provisions as is into national law. Instead of introducing additional national regulations (“gold-plating”), the goal is to create clear, uniform standards across Europe. This will help overcome the existing fragmentation of European capital markets.
- Strengthening competitiveness: Loan funds provide an alternative to traditional bank-based corporate financing. The draft strengthens their lending capabilities – subject to strict supervisory requirements, particularly in risk and liquidity management.
- Focus on Europe: The revision seeks to reduce excessive risk exposures of EU market participants to central counterparties in third countries. At the same time, it aims to strengthen clearing within the EU.
Outlook – Making Germany a More Attractive Financial Hub
The draft marks an important first step toward strengthening Germany as a financial centre. The new rules are intended to make the fund market more attractive while opening up additional financing opportunities for companies and infrastructure projects.
Another draft bill on the Location Promotion Act (Standortfördergesetz) – modelled on the Future Financing Act II of the previous legislative period – will complement that legislation and provide targeted tax incentives for investments into funds.
Given the growing need for financing digital and sustainable transformation, it is a positive signal that new avenues are being explored to mobilise private capital.