The direct impact on the European Union seems to be limited. But we should reflect on whether there are lessons to be learned for the European Union's banking sector.
Thank you for the opportunity of this debate, which is very timely.
And to say that we are monitoring the situation in the US carefully.
The direct impact on the European Union seems to be limited.
But we should reflect on whether there are lessons to be learned for the European Union's banking sector.
Let me start first by giving a brief overview of recent events.
Over the last few days, we saw three US banks fail.
They are Silicon Valley Bank, Signature Bank and Silvergate Bank.
US authorities took swift and decisive action based on their extensive resolution experience.
There was strong cooperation between the different authorities involved:
- the resolution authority, the Federal Deposit Insurance Corporation;
- the supervisor, the Federal Reserve;
- and the US Treasury, providing a backstop.
The failures of these banks show shortcomings in the management of their balance sheets.
This became apparent when the downturn in crypto and the tech sector led start-ups to withdraw their deposits.
In particular, it seems that the biggest of the three banks – Silicon Valley – received a large inflow of corporate deposits during and after Covid.
They invested a significant part of these deposits in long-term, fixed-rate assets.
But they were then faced with an outflow of deposits, so had to sell these long-term assets at a significant loss, as interest rates had risen.
This loss in turn triggered more outflows of deposits.
The bank was unable to raise capital on the market, and the US resolution authorities had to step in.
Let me turn now to the impact on the European Union.
Silicon Valley Bank has a very limited presence in the European Union and we are in touch with the relevant supervisory authorities.
So the direct impact of these bank failures on the EU seems to be limited.
Silicon Valley Bank's German branch had lending, where BaFin has already issued a moratorium, but no deposits.
In Denmark and Sweden, Silicon Valley Bank was present with representative offices, but had no operating branch gathering deposits.
Of course we are monitoring developments with EU supervisors.
And that includes the reaction on the markets, which was initially negative on the EU banking sector but has since calmed down.
It is the role of Competent Authorities, under the coordination of the EBA if necessary, to form a view of the possible exposure of businesses, and particularly the technology sector.
The situation around Silicon Valley Bank is still unfolding and there are many particularities about it.
There are no immediate parallels with EU banks.
But more broadly this situation shows how the economic and financial situation is changing – globally and in Europe.
The shift in interest rates has created a new environment.
The EU financial system, and banks in particular, are adjusting, under close supervision.
We have to stay alert to this new environment....
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