TY  - UNPD
A1  - Heider, Florian
A1  - Krahnen, Jan Pieter
A1  - Pelizzon, Loriana
A1  - Schlegel, Jonas
A1  - Tröger, Tobias
T1  - European lessons from Silicon Valley Bank resolution: a plea for a comprehensive demand deposit protection scheme (CDDPS)
N2  - The SVB case is a wake-up call for Europe’s regulators as it demonstrates the destructive power of a bank-run: it undermines the role of loss absorbing capital, elbowing governments to bailout affected banks. Many types of bank management weaknesses, like excessive duration risk, may raise concerns of bank losses – but to serve as a run-trigger, there needs to be a large enough group of bank depositors that fails to be fully covered by a deposit insurance scheme. Latent run-risk is the root cause of inefficient liquidations, and we argue that a run on SVB assets could have been avoided altogether by a more thoughtful deposit insurance scheme, sharply distinguishing between loss absorbing capital (equity plus bail-in debt) and other liabilities which are deemed not to be bail-inable, namely demand deposits. These evidence-based insights have direct implications for Europe’s banking regulation, suggesting a minimum and a maximum for a banks’ loss absorption capacity.
T3  - SAFE policy letter - 98 
Y1  - 2023
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/64058
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-640587
UR  - https://safe-frankfurt.de/policy-center/policy-publications/policy-publ-detailsview/publicationname/european-lessons-from-silicon-valley-bank-resolution-a-plea-for-a-comprehensive-demand-deposit-protection-scheme-cddps.html
PB  - SAFE
CY  - Frankfurt am Main
ER  -