Former Bank of England Governor Mark Carney suggested on Tuesday that banking rules introduced over the past decade need to be restructured in order to accommodate the speed at which cash can exit a lender in today’s times.
Carney’s comments came in response to the recent banking turmoil that has caused anxiety across global financial markets. In Carney’s eyes, the collapse of Silicon Valley Bank, which sparked the beginning of the turmoil, highlighted exactly why such reflection is needed.
Over $40 billion was withdrawn from Silicon Valley Bank during the 24 hours after its failure. This phenomenon got authorities thinking of another emerging risk, namely the “social media bank” from which clients are able to withdraw funds with just a few taps on their phone.
“That will, I think, require some rethinking of the assumptions behind liquidity coverage ratio, the net stable funding ratio,” Carney stated during his interview on a Reuters Breakingviews podcast.