He banking sector of the european union is in “generally good shape” and There are no “immediate parallels” with the collapse of Silicon Valley Banksaid the bloc’s head of financial services, Mairead McGuinness.
“We are closely monitoring the situation in the United States”, Mairead McGuinness told the European Parliament on Wednesday. “The direct impact on the European Union seems limited.”
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McGuinness said that SVB has little presence in the EU and that the European Commission is in contact with the relevant supervisory authorities. While the banking fallout initially weighed on the European sector, the situation has since calmed down, he added. The Official did not address the latest developments related to Credit Suisse AG, whose shares sank to their lowest level on record on Wednesday.
McGuinness added that the EU still needs a more effective crisis management toolbox for the banking sector to protect deposit confidence, financial stability and taxpayers.
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The EU banking sector has built its resilience in recent years and is closely supervised by EU and national authorities. McGuinness said the failed US banks, including Signature Bank and Silvergate Bank, were not subject to the stricter regulatory requirements on liquidity because the US does not apply to small and medium-sized banks. In the EU, the Basel prudential rules apply to all banks.
“If this had been the case in the US and Basel liquidity requirements will apply, these US banks are likely to have had a stronger liquidity position“, said. “This introduces an important layer of precaution in the prudential regulation and supervision of the EU banking sector”, including liquidity risks, interest rate risks and the need to cover unrealized losses in bond portfolios with capital.
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