The paper analyses the lessons related to banking regulations to be drawn from two
banking failures in March 2023, the bankruptcies of Silicon Valley Bank and Credit
Suisse. The two failures have questioned whether the regulatory system established
following the 2008 crisis can guarantee the stability of the banking sector. The paper
analyses four areas of regulations that have come to the fore linked to the two cases.
They are the issue of applying the principle of “too-big-tofail”, and the regulations
related to capital structure, banking book interest rate risk and liquidity risk.
It is true for all four issues that the currently valid rules are not sufficient to
guarantee stability and proper crisis management if banks have to face crises never
encountered before. Banking regulations providing financial stability should strive
to adopt a new approach instead of further hardening the current rules. A radical
reduction of leverage or the introduction of central bank digital currency could become
examples of such a new approach.
