The Supervisory Board of the European Central Bank (ECB) meets unscheduled to discuss vulnerabilities in the European banking sector. The reason for the conversation is the increasing nervousness in the financial sector after the bankruptcy of two American banks.
Last week, Silicon Valley Bank (SVB) and Signature Bank went bankrupt. Yesterday the First Republic Bank was propped up with $ 30 billion by a number of large American banks. There were also great concerns among investors about the Swiss Credit Suisse.
According to a spokesperson, the meeting is intended to exchange ideas and to keep each other informed of recent developments. The financial health of banks in the euro zone will probably also be discussed, as will the possible risk that a bank run could occur here, as with the US SVB. Ad hoc meetings of this kind take place more often at the ECB.
ECB President Christine Lagarde underlined yesterday that the European banking sector is ‘shock resistant’, but that the central bank is closely monitoring the situation. At a meeting with finance ministers in Brussels, her colleague Luis de Guindos, vice president at the central bank, reportedly did not want to rule out the possibility that some lenders in Europe are at risk now that interest rates are rising sharply.
Nevertheless, the ECB raised interest rates in the euro zone by another half a percentage point, more or less according to plan, on Thursday. This means that policymakers in Frankfurt have not been unsettled by all the unrest. “We have to do our job,” Lagarde said afterwards. The ECB, she says, will “not back down” when it comes to fighting inflation.