Silicon Valley Bank (SB) was shut down on Friday 10th March 2023. This was the largest failure of a US bank since the financial crisis in 2008. MEPs request a debate on the implications of the failure and the impcations for financial stability in Europe. Extracts from the debate. The transcription is the result of an automatic process. Please, check against delivery.

Strasbourg

debate

plenary session

McGUINNESS, Mairead (EPP, IE)

banking supervision (T)

financial supervision (T)

FERNÁNDEZ, Jonás (S&D, ES)

FERBER, Markus (EPP, DE)

URTASUN, Ernest (Greens/EFA, ES)

YON-COURTIN, Stéphanie (Renew, FR)

The failure of the Silicon Valley Bank and the implications for financial stability in Europe: extracts from the debate

Opening of the debate by the Vice-President

SOUNDBITE (English), Mairead MCGUINNESS, Commissioner, Financial Services, Financial Stability and Capital Markets Union, Silicon Valley bank has a very limited presence in the European Union, and we are in touch with the relevant supervisory authorities. So the direct impact of these bank failures on the EU seems to be limited.

SOUNDBITE (English), Mairead MCGUINNESS, Commissioner, Financial Services, Financial Stability and Capital Markets Union, - It is the role of competent authorities under the coordination of the EBA, if necessary, to form a view of the possible exposure of businesses and particularly the technology sector.

SOUNDBITE (English), Mairead MCGUINNESS, Commissioner, Financial Services, Financial Stability and Capital Markets Union, We have to stay alert to this new environment. Higher inflation and rising interest rates present different challenges to financial stability than low for long interest rates. The problem of unrealised losses on the bond portfolio of Silicon Valley Bank is an illustration of that.

SOUNDBITE (English), Mairead MCGUINNESS, Commissioner, Financial Services, Financial Stability and Capital Markets Union, - All of this confirms that we need an effective crisis management toolbox for the banking sector to protect depositor confidence, financial stability and taxpayers.

SOUNDBITE (German), Markus FERBER (EPP, DE), Further steps will follow, but there are side effects, and banks need to be prepared for this. And the second aspect when it comes to assessing what's happened is the. Circumstance that there are international standards for banking supervision and in Europe. And thank you for mentioning this, Commissioner. This smallest bank has the same obligations under Basel than the big banks, and that's a major difference with the USA.

SOUNDBITE (Spanish), Jon&#225;s FERN&#193;NDEZ (S&amp;D, ES), At the trilogue on Basel's implementation, we need to be very cautious in the light of what happened in the US and we need to revise and negotiate and ensure to what extent Europe is able to apply Basel, because although we may apply the set, whether we apply the same criteria to all banks, we do not apply all of the Basel rules.

SOUNDBITE (French), St&#233;phanie YON-COURTIN (Renew, FR), Nobody knows at the moment. One thing is clear you mentioned the rules on the emergency measures which we have on these are, you say, solid dykes which will protect our banking sector. We regularly carry out stress tests against inflation, for example, and according to a number of ministers for finance in the European Union, we are told that we can believe the strength of our system, but we should be realistic. The failure of these banks affects the digital sector, which knows no boundaries.

SOUNDBITE (Spanish), Ernest URTASUN (Greens/ALE, ES), Unfortunately, I have to say that the lessons of the 2008 crisis seem to have been forgotten. And for my group we have spent for a long time now, we have been sounding wants words of alarm about the dangers in this case with this bank have shown to be right since Trump's measures. A few years ago, there has been less serious and less close scrutiny in the US than previously. But unfortunately the same thing is happening in the EU.