An attention-grabbing, if perturbing, piece from Reuters in a single day, citing two unnamed, ‘banking executives’ as sources.
Briefly:
- European Central Financial institution has requested some banks to carefully monitor exercise on social media to detect a worsening in sentiment which might result in a deposit run
- European regulators have sharpened scrutiny of banks’ liquidity after the collapse of Silicon Valley Financial institution and Credit score Suisse in March final yr, the folks mentioned
A ‘financial institution run’, in a nutshell, is when clients of the financial institution rush to withdraw deposits on the identical time.
For instance, in October 2022, a social media publish from a journalist saying {that a} ‘main worldwide funding financial institution is on the brink’, led to a run on Credit score Suisse, with purchasers withdrawing greater than 100 billion Swiss francs ($116 billion) by the tip of the fourth quarter of that yr.
The velocity at which purchasers yanked deposits has triggered a debate globally on whether or not, below the present regulation, establishments can stand up to sudden liquidity shocks, and whether or not new guidelines is perhaps wanted.
Extra at the link if you’re . I am simply coming out to the ATM ….
