Rinaldi: ECB rate hikes expose the European banking system to systemic risks
Speech by Antonio Maria Rinaldi, ID-Lega group, to the European Parliament on the credit crisis underway in the USA due to the bankruptcy of SVB Bank and Signature Bank. We offer you both the live speech and its text, in which the risks that the European credit system runs in the face of a new type of crisis are inferred.
Silicon Valley Bank failure debate and implications for financial stability in Europe. My speech in Strasbourg pic.twitter.com/WJPZQeSLFB
— Antonio M. Rinaldi (@Rinaldi_euro) March 15, 2023
Here is the text:
Given that the current US banking crisis for now has very different contours compared to the previous ones, we cannot help but highlight these considerations:
-The failure of Silicon Valley Bank was triggered by the default of a financial/banking platform linked to cryptocurrency assets. Are we sure that the European banking system is free from the same risk?
– The monetary policy undertaken in the last year by the ECB on the increase in rates to counter the increase in inflation, extremely exposes the banking-financial system to systemic risks like that of 2008. The sudden increase in rates has corresponded to a fall of the prices of outstanding bond assets, generating potential liquidity problems in the banking system. What economists call the “Black Swan Theory” could manifest.
-These considerations should induce the ECB, as is already happening for the FED, to immediately review its perspectives on the dynamics of interest rates together with a more reassuring communication towards citizens and businesses already enormously affected by the recent increase in the cost of loans and mortgages.
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The article Rinaldi: ECB rate hikes expose the European banking system to systemic risks comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/rinaldi-gli-aumenti-dei-tassi-della-bce-espongono-il-sistema-bancario-europeo-a-rischi-sistemici/ on Wed, 15 Mar 2023 17:17:50 +0000.