Bundesbank President Joachim Nagel sees the danger of a possible bank run, which could be triggered by false reports in social media. He brings an expansion of banking supervision into play.
For the President of the Deutsche Bundesbank, Joachim Nagel, the case of the Silicon Valley Bank showed that banking supervision needs to become faster. Statements on social media helped accelerate a bank run, he told the editorial network Germany.
In a bank run, large numbers of savers pull their money from a bank at the same time. In the worst case, the financial institution could then default. From Nagel’s point of view, the question is whether fake news can also trigger something like this.
In the spring of this year, customers of the Californian bank withdrew 42 billion US dollars in just one day. The money house got into trouble because more and more customers wanted their money. The bank had to sell long-dated government bonds at a loss. Previously shared news via Twitter fueled the so-called bank run that ultimately led to the failure of Silicon Valley Bank in March.
Extending banking supervision to social media?
In the editorial network Germany, the President of the Bundesbank has now brought an extension of banking supervision to social media into play. The supervisors could then recognize at an early stage whether there was a risk of a so-called bank run.
Bundesbank President Nagel said he had heard from a colleague in South Korea that a banking supervisory task force was systematically monitoring social media there. They can then see early on if something like this is emerging. “We could also think about that in Europe,” said Nagel. “We must not rest on our laurels, we have to take a close look and sharpen any “blind spots” in supervision.”