EU should draw lessons from US banking collapse: Commissioner

By Al Mayadeen English
Source: Agencies
15 Mar 2023 21:51

On Friday, Silicon Valley Bank (SVB) failed and was taken over by Californian regulators after 60% of its shares plunged.

European Commissioner for Financial Services, Financial Stability, and Capital Markets Union Mairead McGuinness. (Twitter)

European Commissioner for Financial Services, Financial Stability, and Capital Markets Union Mairead McGuinness said on Wednesday that the European Union should take into consideration important lessons on "prudential regulation" from the recent collapse of large banks in the US.

"We are watching events in the US... The direct impact on the European Union seems limited and we are in touch with the relevant supervisory authorities. We are also considering what these failures can teach us in terms of prudential regulation, supervision, bank crisis management, and deposit insurance," McGuinness said before the European Parliament.

EU Commissioner Mairead McGuinness insists the direct impact of the #SiliconValleyBank collapse on Europe is "very limited" and that authorities are monitoring the situation "carefully."

"We can say the EU banking sector is overall in good shape," she tells #EPlenary. pic.twitter.com/I2fagPDe1u
— Jorge Liboreiro (@JorgeLiboreiro) March 15, 2023

On Friday, Silicon Valley Bank (SVB) failed and was taken over by Californian regulators after 60% of its shares plunged. Another bank, Signature Bank, closed on Sunday due to systemic risks.

SVB is considered the second largest bank failure in history, whereas Signature Bank is viewed as the third.

Yesterday, former US President Donald Trump said that the SVB failure was a sign of the times of economic downfall in the US.

"Two big banks yesterday closed, that's a bad sign, that could be the beginning," he stated, referring to the banks' collapse which is suspected to have started due to the increase in interest rates by the Federal Reserve System.

A hike in interest rates is considered to be the reason behind the impairment of assets on the balance sheets of many financial institutions and poor risk management.

Paolo Gentiloni, European Commissioner for Economy, said on Monday that Europe does not see the prospects of serious risks for its financial system in light of the collapse of US banks.