KEY POINTS
  • Regulators and officials across the European Union have been nervous about potential contagion to their banking sectors after the recent turmoil in the United States.
  • However, they think the U.S. should learn from some of the regulatory works put in place in the euro area.
  • Basel III is a set of reforms that strengthens the supervision and risk management of banks and has been developed since 2008.
  • It applies to most European banks, but American lenders with a balance sheet below $250 billion do not have to follow them.

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Chair of the ECB Supervisory Board Andrea Enria and Chairperson of the European Banking Authority (EBA) Jose Manuel Campa in the European Parliament on March 21, 2023.

U.S. regulators made mistakes in failing to prevent the collapse of Silicon Valley Bank and other financial institutions, according to lawmakers in the European Union who believe this is also a moment for some self-assessment in Europe.

Silvergate Capital, a bank focused on cryptocurrency, was the first to fall, saying March 8 that it would be ceasing operations. Shortly after, Silicon Valley Bank failed after a run on deposits. Signature Bank, which focused on lending to real estate firms, then saw deposit outflows leading regulators to seize the bank to prevent contagion across the sector.

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