Speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB

Brussels, 7 December 2023

Introduction

The March 2023 turmoil sent shockwaves through the financial world. It brought back ominous memories of the fall of Northern Rock and Lehman Brothers, and the ensuing great financial crisis.

Start-ups and venture capitalists that deposited money at Silicon Valley Bank (SVB) were in a bind.

People worried that more banks would start to wobble.

Investor trust suddenly eroded and banks’ stock prices plummeted.

The collapse of SVB and takeover of Credit Suisse became the most serious system-wide banking stress since 2008.

Several reports have now been published on the lessons learned from this crisis episode and they all highlight the importance of effective banking supervision.

In its candid investigation report into the failure of SVB, the US Federal Reserve concludes that supervisors were too focused on accumulating supporting…