Paolo Angelini: The banking crises of 2023 - some initial reflections

Remarks by Mr Paolo Angelini, Deputy Governor of the Bank of Italy, at the event "Promoting Accountability in Times of Crisis", Tenth Annual Meeting of the Working group on financial and economic stability of the The International Organization of Supreme Audit Institutions (INTOSAI), hosted by the Corte dei Conti, Rome, 8 November 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I am happy to be here at such distinguished event to share some thoughts about the banking crises of last Spring. Such events triggered reflections in the international fora about possible improvements of the current supervisory and regulatory framework on banks and of the existing resolution tools. This is the topic of my remarks today.

1. The recent banking crises

In less than two months – from 8 March to 1 May 2023 – four mid-sized US banks (Silicon Valley Bank, Silvergate Bank, Signature Bank, First Republic Bank) and a globally significant Swiss one (Credit Suisse) were shut down, put into receivership, rescued or closed. The event, involving banks with overall total asset exceeding $1,100 billion, was the most significant system-wide banking stress in terms of scale and scope since the Great Financial Crisis. It sent shockwaves throughout the global financial system. In the two weeks following 8 March asset prices worldwide fell, quite sharply for banks' equities, and the cost of insuring bank default surged. 

Wide-scale public support measures were deployed by the US and Swiss authorities to manage the crises and mitigate the impact of the stress, including significant central bank liquidity provision to banks, the activation of FX swap lines, government backstops and guarantees, an extension of deposit guarantee schemes; in the case of Credit Swiss a complete write-off of Additional Tier 1 (AT1) instruments was also effected, a decision which has sparked a lively debate about the legitimacy of the decision as well as on the loss absorption capacity of this class of instruments.