Financial watchdogs must “significantly” increase their budgets in the wake of recent banking crises, said the head of the umbrella body for central banks, arguing that more intensive day-to-day oversight was critical to preventing failures.
Global policymakers are weighing rule changes to better insulate banks from risks such as changing interest rates and a swifter flight of deposits, two factors that fuelled the biggest spate of collapses since the global financial crisis of 2007-08. Among the most high-profile failures, Silicon Valley Bank was shut down by the Federal Deposit Insurance Corporation in early March, while Credit Suisse was forcibly sold to Swiss rival UBS a week later.
Agustín Carstens, head of the Bank for International Settlements, said that while there was a case for making regulatory “adjustments”, the approach had its limitations because “there is simply no reasonable level of minimum capital and liquidity that can make a bank viable if it has an unsustainable business model or poor governance”.