Politicians don't get more veteran than the president of the Bundestag, 75-year-old Wolfgang Schäuble. So it's interesting to recall what he told the German parliament on Tuesday in the wake of the breakdown in talks to form a new government coalition.

"Dear colleagues we have an extraordinary situation," the elder statesman said. "It's a test, but it's not a crisis of state."

Angela Merkel may have failed for the moment to pave the way for a new German government. But that doesn't mean that Germany is without a government. On the contrary, Merkel continues to govern from the Chancellor's Office just as she's done for the past 12 years.

Officially Merkel is now a caretaker chancellor leading a caretaker government. But the German constitution gives the current government the same powers and duties as one sanctioned by an election. There is also no time limit. The same government cabinet members who have led Germany for the past four years will continue in their posts until a new government has been formed and they can be replaced.

Uncertainty as opportunity for democracy

The FDP precipitated the crisis talks when they withdrew from coalition negotiations on Sunday

The situation may be uncertain, but many parliamentarians — including those from the center-right, pro-business Free Democratic Party (FDP), which scuppered the coalition talks last weekend — think that the opacity of the current situation opens up new possibilities.

"The hold of the big establishment parties is loosening somewhat," FDP member of the Bundestag Christoph Hoffmann told DW. "We now have more parties in parliament, and it's more difficult to arrive at a stable coalition. We have to get used to that. But it's a chance for democracy and won't weaken the parliament."

Johannes Kahrs of the left-wing Social Democrats, who together with Merkel's conservatives formed the grand coalition that still runs Germany, seconds that sentiment.

"We have a working government," Kahrs told DW. "We have a budget. We also have a debate right now about what to do with the results of the national election. But that should be part of any democracy."

Watch video 03:20 SPD-politician Johannes Kahrs: SPD should consider all options

No fundamentally new policy directions

Practically speaking, the only thing the caretaker government isn't able to do is make decisions that would involve major changes in policy. Two major examples from Germany's recent past, for instance, the end of compulsory military service and the phase-out of nuclear power, would be impossible right now.

The constraints of a caretaker government became evident at the COP23 Climate Conference in Bonn last week. There more than 20 countries declared that they wanted to phase out coal as a source of power. German Environment Minister Barbara Hendrix would have loved to join them, but had to defer, saying that she didn't want to preempt the next government's policies.

There's nothing in the German constitution that mandates this, but it is governmental practice.

Germany's hands were tied to an extent at COP23

If the caretaker government has no choice but to take an important decision, it can still ask for the support of the new Bundestag, where conservatives and Social Democrats still have a healthy majority. Even though the SPD has ruled out a continuation of the grand coalition, Social Democrats would likely support individual measures to help the government of which they are still part.

Other options, examples from other countries

The collapse of the coalition talks has got many people in Germany talking about the possibility of a minority government. Merkel's conservatives could form a coalition with either the Greens or the FDP and then try to secure the missing votes they need ad hoc for individual initiatives.

Denmark, for instance, is quite familiar with such minority governments, although experts doubt that they could function in the long term in Germany.

"A minority government certainly wouldn't be a problem in the short term," says Volker Boehme-Nessler, a professor of law and political science at the University of Oldenburg. "But it's not a long-term solution. It's psychologically difficult to pass new laws with new partners each time."

The Netherlands took seven months to form a new government

The non-ideological Merkel may seem like the ideal leader to cope with such a situation, although detractors sometimes say the reverse side of her pragmatism is a complete lack of political vision. But even Merkel says she prefers a new election if she can't create a coalition with a stable majority.

Whether a fresh vote will be needed or not, Germany can take heart from the examples of its neighbor the Netherlands. It took the Dutch seven months to agree on their current government after their national election in March. Chaos did not break out there, and there's no reason to expect it would in Germany either.