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The world’s financial system, strengthened by reforms after the 2008 meltdown, is not under threat from recent banking-sector turmoil, the governor of the Bank of England said Wednesday. online news
“The post-crisis reforms to bank regulation have worked. Today I do not believe we face a systemic banking crisis,” Andrew Bailey said in a speech at the Institute of International Finance in Washington.
“When I look at the UK banks, they are well capitalized, liquid and able to serve their customers and support the economy,” he noted.
Bailey is in Washington to participate in spring meetings of the World Bank and International Monetary Fund.
This year’s get-together is held against the backdrop of elevated but easing inflation — and concerns over commercial lenders after the collapse of Silicon Valley Bank and the enforced UBS takeover of Credit Suisse.
“In recent weeks, we have seen the crystallization of problems in a few parts of the banking sector,” said Bailey.
He added: “We saw with Silicon Valley Bank that with the technology we have today — both in terms of communication and speed of access to bank account — runs can go further much more quickly.
“This must beg the question of what are appropriate and desired liquidity buffers that create the time needed to take action to solve the problem.”
The remarks come as fears about the financial industry have been tempered in recent weeks.
Britain’s banking industry has emerged relatively unscathed from the turmoil.
London-listed HSBC agreed in March to buy the UK arm of failed lender SVB for a nominal £1 ($1.2), in a rescue deal overseen by the BoE and the government.
The lack of contagion has also left the door open to more interest rate hikes in Britain to tackle elevated inflation.
The BoE has ramped up interest rates 11 times in a row since late 2021 when borrowing costs stood at a record-low 0.1 percent.
Its key rate currently stands at 4.25 percent, the highest level since late 2008.
Bailey had warned last month that the BoE needed to see inflation come down sharply before ending its current monetary-tightening cycle.
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