March 20, 2023 12:18 GMT
MNI BRIEF: Call For EU To Strengthen Resolution After SVB
(MNI) Brussels
https://cepr.org/voxeu/columns/silicon-valley-bank-collapse-prudential-regulation-lessons-europe-and-worldEU authorities need to further improve the framework for bank resolution in light of the collapse of SVB bank, according to a paper in VoxEU CEPR authored by former ECB Chief Economist Peter Praet and other experts.
The EU should provide more information about the proportion of banks who meet the 8% requirement for bail-in-able securities, while avoiding providing any spur to deposit flight by temporarily suspending the requirement while institutions still below this threshold are given a publicly-announced timetable to meet it, the paper by Mathias Dewatripont, Praet and Andre Sapir argues.
Authorities should also bolster the security of companies’ deposits at banks, by raising the EUR100,000 guarantee threshold, funded by charging banks insurance fees, or by either raising the volume of claims junior to deposits or by strengthening liquidity coverage ratio requirements by raising expected monthly outflow rates,
The banking crisis is likely to be a key issue at this Friday’s Euro Summit, when ECB President Christine Lagarde meets with eurozone leaders.
The banking crisis is likely to be a key issue at this Friday’s Euro Summit, when ECB President Christine Lagarde meets with eurozone leaders.
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