By Sam Boughedda
Some regulators at the European Central Bank are rethinking their treatment of liquidity risk following the collapse of SVB and the crisis at Credit Suisse Group (NYSE:CS) in the last few weeks, according to Bloomberg on Thursday.
The report states sources told them that European watchdogs are in the early stages of assessing how to improve banks' liquidity management, although no formal discussions are underway.
Bloomberg adds that individual regulators on the ECB's Supervisory Board want a clearer understanding of the share of deposits lenders can expect to retain during a crisis.
They add that even small modifications to the approach to liquidity could significantly impact how banks run their businesses.
Jose Manuel Campa, who leads the European Banking Authority, is said to have told lawmakers on Tuesday that bank deposits have become "more sensitive to interest rate differences and susceptible to be moved at short notice."
He added that even a "pinch of uncertainty" on financial stability could strengthen a downward spiral.