Banks face greater regulation on the amount of money they must hold to cover potential bank runs in the wake of the collapse of Silicon Valley Bank, a Bank of England chief has warned.
Sam Woods, the chief executive of the Prudential Regulation Authority, the Bank's financial services regulatory body, said the speed of the withdrawals from the Californian lender had concerned policy makers.
He told MPs on the Treasury select committee that it created a "question for all of us" about whether current ratios of deposits banks are required to hold are high enough.
During the same evidence session, Bank of England Governor Andrew Bailey said the collapse was the fastest since Barings Bank in 1995.
Mr Woods, who is also deputy governor at the Bank of England, said regulators would look again at the liquidity coverage ratio, which requires banks to hold enough liquid assets to fund cash withdrawals for 30 days.
Mr Woods told MPs: "Where I think there might be more of a policy question - it's an international question in which we'll take a close interest - is around the calibration of the liquidity coverage ratio.
"That's the one-month liquidity that the banks have to hold.
"A very striking feature of this Silicon Valley Bank run - not so much of the Credit Suisse run - was the speed with which it took place.
"You can see $2.9bn of deposits going out in a day on Friday 9th March.
"The sort of outflow rates that we have - the percentage of deposits that are assumed to run out - in that liquidity coverage ratio.
"Some actually are 100pc. So deposits from financial institutions are assumed all to go but operational deposits are less than that and retail deposits less still.
"So I think there’s going to be a question for all of us as to whether those outflow rates are quite high enough."
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2023-03-28 10:27:16Z
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