The shock waves caused by the decline in the Credit Suisse stock market, the risk of First Republic Bank insolvency and the collapse of Silicon Valley should not affect euro banking. At least this is the belief of the Central Bank (ECB). At the end of an emergency meeting held this morning to assess the risks of financial turmoil in the single currency area, the institution, led by Christine Lagarde, concluded that euro zone banks’ exposure to Credit Suisse is minimal, El Economista reports. referring to Reuters.
The ECB also rules out a run on bank accounts. Regulators have verified that there is no reduction in deposits, testifying to agents’ confidence in the European financial system, a source told Reuters news agency.
This emergency meeting, already the second in a week, took place just hours after the ECB announced a new interest rate hike of 0.5 point. The vice-president of the institution, Luis de Guindos, delivered a message of calm at the time: “European banks have capital and solvency ratios are good”.
Earlier in the week, due to the turmoil in the banking sector, there had been an extraordinary meeting that brought back memories of 2008 when troubles in the US led to a global financial crisis.
In the US, regional bank First Republic found itself in a difficult position as customers withdrew a large portion of their deposits, raising concerns following the collapses of Silicon Valley Bank on March 10 and Signature Bank on March 12.
In Europe, the Swiss bank Credit Suisse was in trouble and received a capital injection of CHF 50 billion from the Swiss central bank to overcome liquidity problems.
Credit Suisse is one of 50 banks considered “systemically important” by the international financial system.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
