“Since March, the global financial system has been subjected to a kind of stress test,” said chief regulator Mark Branson, referring to the collapse of US regional banks and the takeover of UBS under official pressure from his rival, Credit Suisse. .
Although the acute phase of the crisis appears to have passed, the official warned that “periods of tension usually occur intermittently”.
As interest rate hikes continue in the Eurozone, banks benefit from higher interest rates, but the valuation of bonds held by these banks can quickly lose value when interest rates rise, and this phenomenon caused the sudden collapse of the American “Silicon Valley”. bank.
Therefore, Branson stressed that “vigilance” is necessary because “bank flows and liquidity crises are happening faster today than before.”
However, the official pointed out that “there are no logical reasons for a liquidity crisis in German institutions”.
But “it is important to learn the lessons of recent months” and to discuss “how we should strengthen regulation and supervision if necessary” in the EU.
The head of Germany’s financial watchdog stressed that “expensive and unlimited government bailouts cannot be the way forward”.
And Mark Branson said it should be possible to get smaller companies out of the market faster in the event of bankruptcy.
Similarly with regard to large systemically important institutions, “none of them should be too big to fail”.
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