Banking supervisors and regulators need to consider new drivers and channels of financial contagion, as well as the speed at which turmoil can spread. The run on Silicon Valley Bank’s deposits was referred to as “the first Twitter-fuelled bank run”. [2] In a recent speech, SSM (Single Supervisory Mechanism) Chair Andrea Enria warned of “mimetic contagion”.
[3] Investors are trying to draw conclusions on vulnerabilities by looking for similarities between banks and their business models. Recently, market participants have paid close attention to the unrealised losses that banks have on their books, to the level of uninsured bank deposits, or to banks’ exposure to commercial real estate markets.