LONDON:
Monetary regulators might want to be sure that banks retain enough monetary buffers as advances in know-how improve the danger of financial institution runs, a senior Financial institution of England official mentioned on Friday.
Challenges going through central banks included “how to make sure that banks’ liquidity insurance coverage stays applicable as technological change will increase the danger of bigger and sooner deposit runs, of the sort seen this spring within the US,” the BoE’s govt director for markets, Andrew Hauser, mentioned.
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The sudden collapse of US lender Silicon Valley Financial institution in March caught regulators unexpectedly as depositors rushed to empty their accounts utilizing on-line banking providers.
In a speech made at a convention organised by King’s Faculty London, Hauser mentioned central banks additionally wanted to guage the place their steadiness sheets ought to settle after increasing vastly since over 15 years of emergency bond-buying.
A 3rd problem was how to make sure the soundness of the monetary system as an entire – together with non-bank market finance similar to hedge funds – within the face of more and more frequency systemic liquidity shocks.