EU officials on Friday expressed confidence that European banks are liquid and resilient. Supervisors would continue to monitor developments in the system. The background of the conversation is the bank earthquake in the US and Switzerland.
“I have great confidence in the liquidity and resilience that our banking system has built,” Eurogroup chief Paschal Donohoe said at the EU summit in Brussels on Friday. National and European regulatory authorities have contributed to this. In addition, political decisions have proven their worth and regulators will continue to monitor developments in the banking sector.
More cross-border investments?
Estonian Prime Minister Kaja Kallas also believes that lessons have been learned from the banking crisis. “I think our banking system is quite resilient,” she said. However, more can be done, Kajas noted. The banking and capital markets union is necessary for the European economy. The Capital Markets Union is essentially about removing bureaucratic hurdles between individual EU countries to give companies more options to raise money. In addition, consumers should be given more options for cross-border investments.
Corresponding plans from the European Commission have been on the table since September 2015, but implementation has come to a standstill, partly due to resistance from German banks. They fear that their money could be used to fund imbalances at institutions in other countries.
The reason for the banking crisis in early March was the liquidation of the American financial group Silvergate Capital, which focuses on the crypto industry. A few days later, US money house Silicon Valley Bank (SVB), specializing in seed financing, was placed under the control of US deposit insurance company FDIC and closed. Other small banks stumbled.
Bank values plummeted
In Europe, the major Swiss bank Credit Suisse (CS) has entered the crisis after numerous scandals, criticism of poor risk management and outflows of hundreds of billions of euros. Government and regulators urged competitor UBS to take the helm to avert a global financial crisis. As a result, bank values on the stock exchanges fell sharply.
Source: Krone
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