Banks as well as the European Banking Authority (EBA) were surprised at the speed with which customers withdrew their deposits from Credit Suisse or Silicon Valley Bank (SVB) in the spring, causing the banks to wander. The European supervision authority is therefore wondering whether it has taken sufficient account of the liquidity risks.
Weekly Delivery of Data
Data collection is expected to begin later this year. It is intended to provide information about the duration and type of customer. The data are intended to help the ECB decide whether certain banks should be subject to higher liquidity requirements. The central bank proposes collecting weekly data from banks on their liquidity reserves.
Since the end of 2021, the ECB has been pushing banks to check their liquidity more closely. Indeed, rising inflation leads to an increase in financing costs. But as the Bloomberg news agency reports, many high-level supervisors do not yet have a complete picture. The move reflects the need for more information rather than acute concerns about the sector, it says.
Higher Liquidity Coverage Rate in Talk
“The European Banking Authority has recently pointed out that regulators need to obtain additional and more frequent liquidity information from banks,” a spokesman for the ECB said in a reply to Bloomberg. “Even though the banks in the eurozone have a comfortable liquidity position, the ECB is now considering how to proceed.”
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The events at Credit Suisse and SVB showed that large unsecured daily deposits are volatile. The ECB’s new weekly data collection could begin in the course of the year, with no final decision yet, it says. Deposits from intermediaries or digital platforms may also have to be identified, as they are considered to be more volatile than others.
The data collected is intended to help the ECB decide whether certain banks should be subject to higher liquidity requirements. For example, higher requirements for the so-called liquidity coverage ratio (LCR) have already been discussed.
