Phenomenon of brokered deposits gaining regulatory scrutiny; EU bank watchdogs are looking harder at liquidity requirements
European banks which rely on deposits supplied by third-party platforms should face tougher liquidity requirements to stem the risk of future hot money outflows, according to a senior official.
After hundreds of billions of dollars in customer funds flowed out of US regional lenders this year, the small-but-growing phenomenon of brokered deposits is one aspect of bank liquidity that’s gaining increasing scrutiny, on the grounds that customers can easily yank their money to find the highest bidder using online platforms.
“When I see banks relying on brokered deposits, I really worry,” Tom Dechaene, a member of the European Central Bank’s Supervisory Board, said in an interview from Brussels. “I cannot think of any more volatile deposits than that.”...
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