(Bloomberg) -- Bank of England Governor Andrew Bailey has warned that the age of social media and digital banking is causing lightening-quick bank runs after the sudden collapse of Silicon Valley Bank.
Bailey said one of the lessons regulators need to learn from SVB is the “speed at which runs can take place” given the technological advances since the financial crisis.
“It is striking that that happened very quickly — word gets around,” he said Monday in response to questions after a speech at the London School of Economics. “This is very different from the Northern Rock-style queue outside the branch type thing.”
The remarks underscore the challenges banking regulators including the BOE face in managing the stability of the financial system in an era when social media can amplify and spread rumors more quickly.
SVB’s UK unit suffered a rapid withdrawal of deposits as concerns grew for the lender. The incident prompted regulators in the US and UK to push SVB into a resolution process, leading to HSBC Bank Plc to buy the British unit of the American lender.
“We have to constantly look at the calibration of liquidity measures to say how do they match to that sort of dynamic that’s taking place,” Bailey said.
Read more:
- Bailey Suggests BOE Won’t Lift Rates Back to Pre-Crisis High
--With assistance from Lucy White.
©2023 Bloomberg L.P.
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