ECB calls extraordinary meeting to discuss US banking turmoil | banking

The European Central Bank (ECB) has called an extraordinary meeting of the supervisory board for this Friday to discuss the turmoil in the banking sector in the United States. “The board is meeting to exchange views and inform members about recent developments in the banking sector,” said a spokesman quoted by the German press.

Already earlier in the week there had been an extraordinary meeting due to the turmoil in the banking sector that stirs memories of 2008 when problems in the US led to a global financial crisis.

Now in the US, regional bank First Republic got into a tough spot as customers withdrew a large part of their deposits, which created concern after the collapse of Silicon Valley Bank on March 10th and Signature Bank on March 12th.

In Europe, the Swiss bank Credit Suisse has been in difficulties and received a capital injection of 50,000 million Swiss francs from the Swiss Central Bank to overcome liquidity difficulties. Credit Suisse is one of the 50 banks considered “systemically important” by the international financial system.

There are fears of contagion and a crisis of confidence that could lead to withdrawals of deposits, which could drag down other banks. In European stock markets, bank shares have been trading at lower levels since the start of the turmoil.

Despite the critical situation, the ECB maintained on Thursday its course of raising interest rates and raised them by half a percentage point. ECB President Christine Lagarde acknowledged that some members of the Governing Council had voted against the decision and would have preferred to wait for the situation in the banking sector to develop.

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