From a functional perspective, banking law is all about the processes of money creation, safekeeping of money, monetary circulation and the destruction of money. Money functions as a means of payment and exchange, is a storage medium and serves as a value measurement. Physical money, or cash, nowadays consists of coins and banknotes which, as objects within the meaning of paragraph 90 of the German Civil Code (BGB), have a considerably lesser intrinsic value due to their raw material being of little value (paper, metal). This is different in the case of commodity money (gold, silver, raw materials), which should be distinguished from so-called fiat money. This is money with no intrinsic value. Its financial strength is based on confidence. The term fiat money generally covers cryptocurrencies, or rather digital assets, which can be seen as a kind of ‘private money’ or as a mere object of speculation. Finally, the last category, of book or bank money, represents a bank client’s right to receive an account’s credit balance in cash. Book money forms the basis for non-cash payment transactions. Every form of money enables economic trade relations, be it on a national or international basis. Money gives the individual the freedom and power to shape their life independently.
The legal bases of private banking law are, in addition to the German Civil Code (BGB), the German Commercial Code (HGB) and many special laws (e.g. the German Act on Cheques, the German Bills of Exchange Act, the German Pfandbrief Act, etc.). Moreover, contract law including the General Terms and Conditions of banks (in German: AGB-Banken) and of savings banks (in German: AGB-Sparkassen), individual contracts and special conditions play an important role in private banking law.
Public banking law includes supervisory law, the monetary system and organisational law for banks (e.g. concerning the requirements of a banking licence or the obligations on banks). In Germany, above all, the German Banking Act (KWG) aims to ensure the effective regulation and organisation of the banking market. On the one hand, this concerns the security and preservation of the functionality of the credit industry. On the other, it aims to protect creditors’ interests to avoid, for example, losses in relation to bank deposits. Further legal bases of public banking law include the German Bundesbank Act (BBankG), the German Capital Investment Act (KAGB) and the German Bausparkassen Act (BausparG).
A lawyer working across disciplines will comprehensively consider all the economic and legal aspects within a mandate. This is true for both precautionary activity such as, for example, examining or drafting a contract, and advocacy executed after things have already gone wrong for a bank’s client.
In recent years, the huge economic distortions caused by the international subprime and banking crises have made evident how important banking law is for the development of society as a whole. Recent developments in the banking sector concern the new financial products which banks and other enterprises constantly generate, the EMIR together with all the acts adopted on this by the European Commission, the MiFID, the Mortgage Credit Directive, Basel IV, cryptocurrencies, the question of overheated markets, deposit protection and any new banking crisis that may be forthcoming. Also important are topics such as the de facto suspension of bank secrecy exercised by the legislator, the diverse scandals concerning leaked data (Panama Papers, Paradise Papers), police raids on banks and the purchase of CDs containing personal data, all of which bring with them extensive tax consequences. And due to its possible effects on banks, the United Kingdom’s withdrawal from the EU raises questions which are of worldwide interest. Banking law is both agile and exciting!