The ECB has asked some banks to monitor social media for early signs of bank runs

An interesting, if perturbing, piece from Reuters overnight, citing two unnamed, ‘banking executives’ as sources.

In brief:

  • European Central Bank has asked some banks to closely monitor activity on social media to detect a worsening in sentiment which could lead to a deposit run
  • European regulators have sharpened scrutiny of banks’ liquidity after the collapse of Silicon Valley Bank and Credit Suisse in March last year, the people said

A ‘bank run’, in a nutshell, is when customers of the bank rush to withdraw deposits at the same time.

For example, in October 2022, a social media post from a journalist saying that a ‘major international investment bank is on the brink’, led to a run on Credit Suisse, with clients withdrawing more than 100 billion Swiss francs ($116 billion) by the end of the fourth quarter of that year.
The speed at which clients yanked deposits has triggered a debate globally on whether, under the current regulation, institutions can withstand sudden liquidity shocks, and whether new rules might be needed.

More at the link if you are interested. I’m just popping out to the ATM ….

This article was written by Eamonn Sheridan at Source