With the prevalence of social media, banks face an increased risk of rapid collapses

Andrew Bailey, the Governor of the Bank of England, has cautioned that new technology has increased the likelihood of banks collapsing more quickly than in the past.

During a speech at the International Monetary Fund’s Spring Meetings in Washington DC, Bailey suggested that financial institutions may require more significant cash reserves to protect against bank runs.

He pointed out that the speed of communication and access to bank accounts means that deposit holders can withdraw their funds much more quickly today than during the 2008 financial crisis. As a result, banks may need to increase their cash buffers to give them more time in the event of a bank run.

Nevertheless, Bailey emphasized that British banks are currently well-capitalized and able to serve their customers and support the economy and that he does not believe that there is currently a systemic banking crisis.

The Governor of the Bank of England has indicated that bank runs in the digital age are occurring more rapidly and may compel lenders to retain more cash. Bailey cited the example of Silicon Valley Bank, where technology advancements in communication and bank account access resulted in runs happening much faster than previously.

This highlights the need to reconsider the appropriate and desired liquidity buffers that provide sufficient time to address the issue.

He reassured the Institute for International Finance that the world is not currently experiencing a global banking crisis comparable to the 2008 financial crisis. Bailey acknowledged that the reforms to bank regulation implemented after the crisis has been effective, and stated that British banks are presently well-capitalized, liquid, and able to serve their customers and contribute to the economy.

Linking Shareholders and Executives :Share Talk

If anyone reads this article found it useful, helpful? Then please subscribe www.share-talk.com or follow SHARE TALK on our Twitter page for future updates. Terms of Website Use All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned

Weekly Newsletter

Sign up to receive exclusive stock market content in your inbox, once a week.

We don’t spam! Read our privacy policy for more info.