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European BCs try to calm creditors after SVB collapse: “system remains safe”

The president of the group of finance ministers of the euro zone (Eurogroup), Paschal Donohoe, said this Monday (13) that the euro zone has “very limited exposure” to the Silicon Valley Bank (SVB), an American bank that suffered a meltdown last week. “We have a very strong regulatory framework here in Europe,” he added, during an interview with Bloomberg Television.

Donohoe, however, also added that “of course, any banking development like this really raises questions, and we will certainly discuss this today, in the Eurogroup.” The region’s ministers meet this Monday.

The Irish finance minister also said that the episode shows that the picture can change quickly, but opined that Europe is in a “good position”, due to changes made in regulatory markets over the last decade.

Donohoe emphasized that it is not possible to be complacent. He added that one needs to see where the exposure lies, and said the bloc is looking to support the technology sector eventually, to ensure it can grow and not be significantly affected, as SVB was a bank focused on industry companies in the US.

Also for Donohoe, the European Central Bank (ECB) should maintain its posture to contain inflation.

He recalled that the ECB has said it will make its decisions meeting by meeting, to ensure price control, but did not directly comment on whether there could be changes in these decisions in view of the recent crisis in some American banks and the fears generated by the situation.

british financial system

The Bank of England (BoE) said the UK banking system as a whole “remains safe, sound and well capitalised”, in a statement released on Monday.

The BoE comments that, in consultation with the Prudential Regulation Authority (PRA), the Treasury and the Financial Conduct Authority (FCA), a decision was taken to sell Silicon Valley Bank UK Limited (SVBUK), British subsidiary of US bank Silicon Valley Bank (SVB), to HSBC UK Bank.

HSBC is authorized to conduct the business and is overseen by the PRA and the FCA, adds the central bank’s note.

According to the BoE, the measure was taken to stabilize the local arm of the SVB, ensure the continuity of financial services, minimize problems for the UK technology sector and support confidence in the financial system.

The BOE says that all money deposited in the SVBUK is “safe” as a result of the transaction. SVBUK business will continue as normal and customers should not notice any changes, he adds.

french financial system

French Finance Minister Bruno Le Maire assured this Monday that the bankruptcies of US banks Silicon Valley Bank (SVB) and Signature do not pose risks to French financial institutions.

“I don’t see any risk of contagion, so there’s no specific alert,” Le Maire said in an interview with FranceInfo.

Also according to the minister, banks and the financial system in France are “solid” and have a “high liquidity index” to withstand shocks.

Source: CNN Brasil

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