Umnat Seebuaphan/iStock via Getty Images
The European Central Bank has asked some banks to keep an eye on social media for signs of changing sentiment that could lead to a bank run, according to a media report.
Reuters reported on the requests on Wednesday, citing two bank executives. with knowledge of the matter.
U.S. and European regulators have been assessing the need for greater regulation after Silicon Valley Bank, Signature Bank and Credit Suisse collapsed last spring as customers rushed to withdraw deposits.
In response to the ECB's request, a major European lender has set up a system where the bank's treasury is notified when there is a significant increase in negative social media posts. Treasury staff will then evaluate the possible impact on deposits, according to one of the two bank executives. said Reuters.
In October 2022, Credit Suisse came under pressure when a journalist said on social media that “a major international investment bank is on the brink.” This led to clients withdrawing more than 100 billion Swiss francs ($116 billion) from the bank by the end of the fourth quarter of 2022.
In a financial stability review in November 2023, the ECB saying Social media and trading apps have the ability to accelerate the pace of bank runs.
Last week, Acting US Comptroller of the Currency Michael Hsu suggested a measure that would provide sufficient liquidity to medium and large banks. Giving banks credit for their borrowing capacity from the Federal Reserve for its discount window to cover acute, very short-term liquidity outflows would make clear that regulators expect banks to use the discount window to help cover liquidity outflows. short-term liquidity when needed, he said. .
