The European Central Bank (ECB) has claimed to have “avoided the temptation” to loosen supervision of banks investing in new technologies after the bankruptcy of the Bank of Silicon Valley (TYDintensified both its lending and deposit taking activities. venture capital firms, ‘fintechs’ and ‘startups’. After a high volatility Monday that resulted in gains in the stock markets, the stock markets this Tuesday consolidated with an Ibex surging 2.45% to 9,049.40 points, with gains in bank values, penalizing the most in the previous days.
“The best protection is to avoid extremist business models that are very fragile in these situations, such as venture capital investments. crypto assetsAndrea Enria, Chairman of the ECB Supervisory Board, in his speech before the European Parliament’s Economic and Monetary Affairs Committee, where the head of the European Banking Authority also spoke, said: José Manuel Campa.
Enria noted that the Silicon Valley Bank example was “particularly illuminating” because banks comprised more than 80% of its deposit base. uninsured corporate deposittends to be “more mobile” than others. He added that this is happening in the US regulatory context. Medium-sized banks such as the SVB are exempt or receive preferential treatment under the relevant precautionary rules.such as liquidity requirements — Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) — and capital requirements.
It also clarified that these banks are stress-tested less frequently than larger ones and may be allowed not to reflect certain types of losses in their regulatory capital, unlike the supervision in the EU banking system it once had. He emphasized his “resistance” once again.
It was also noted that while uninsured deposits are also an important source of financing in the euro area, European banks in general operate with a “more diverse” client base.
But Enria cautioned that “sometimes there can be a temptation to look favorably on banks or institutions investing in new technologies,” and this could lead to soothing supervisory measures to make it easier for them to “bloom.”
Campa stressed that the improvement in the supervision and governance of banks puts the EU “in a better position to assess risks more forward”.
However, he urged to “stay vigilant” and to avoid “complaining” because recent crises “show that, despite all the improvements in banks’ capital and liquidity positions, improved regulation and supervision, bankruptcies and shortfalls of confidence can still occur.”