BoE economists outline model of liquidity-solvency spirals
Model aims to test banks against the sort of interactions that led to collapse of SVB and Credit Suisse
Economists at the Bank of England have developed a new model of how liquidity and solvency interact in a crisis – one which is designed to reflect the factors that caused the collapse of Silicon Valley Bank (SVB) and Credit Suisse in 2023.
Authors Giovanni Covi and Tihana Škrinjarić note that rapid withdrawals of funds from both SVB and Credit Suisse led to the banks’ failures. SVB was declared bankrupt in March 2023, and Credit Suisse was acquired by UBS later that month.
The staff working paper
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: subscriptions.centralbanking.com/subscribe
You are currently unable to print this content. Please contact info@centralbanking.com to find out more.
You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@centralbanking.com test test test
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@centralbanking.com test test test
More on Macro-prudential
MNB puts sectoral buffers in place as real estate pressure mounts
Subsidised loans have increased demand for property significantly, central bank finds
BoT seeks more oversight of gold trade to prevent baht volatility
Vitai says bank is working to boost supervision of institutions and dealers involved in precious metal
Vietnam to allow major banks to increase gold positions
State media says central bank aims to reduce gap between global and domestic prices of precious metal
Belgium simplifies capital buffers, increases CCyB by 25bp
Mortgage-specific measure to be folded into single, general buffer
Bundesbank following US instability ‘very closely’ – Nagel
Central bank president says AI and geopolitics pose risks to financial stability
BoE paper explores redistribution from macro-pru tools
Evidence suggests there are stability benefits but also costs from using borrower-based tools
‘Opaque’ AI poses supervisory challenge, says BdF’s Beau
Deputy governor says focus should be on data required for ‘new elements’ of EU’s AI act
RBNZ plans to relax lending restrictions for home purchases
New Zealand central bank says moves will make borrowing easier for first-time buyers