SAFE-CEPR Policy Web Seminar: European Lessons from Silicon Valley Bank Resolution

03 Apr 2023 18:00 PM
03 Apr 2023 19:00 PM

The SAFE Policy Center and the Centre for Economic Policy Research (CEPR) organize and cordially invite you to the presentation of SAFE Policy Letter No. 98
European lessons from Silicon Valley Bank resolution. A plea for a comprehensive demand deposit protection scheme (CDDPS) 
to be held on 3 April 2023, 6-7 pm, online
Jan Pieter Krahnen, Loriana Pelizzon, Tobias H. Tröger, all Leibniz Institute SAFE
Elke König, Single Resolution Board, SAFE Senior Fellow 
Lorenzo Bini Smaghi, Chairman of the Board of Directors of Société Générale

Moderator: Florian Heider, Leibniz Institute SAFE
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.
Lorenzo Bini Smaghi has been Chairman of the Board of Directors of Société Générale since 2015 and is a member of the SAFE Policy Advisory Council. He holds a degree in Economic Sciences from the Université Catholique de Louvain (Belgium) and a Ph.D. in Economic Sciences from the University of Chicago. He began his career in 1983 as an economist in the Research Department of the Bank of Italy. In 1994, he was appointed Head of the Policy Division of the European Monetary Institute. In October 1998, he took up the position of Director[1]General of International Financial Relations in the Italian Ministry of Economy and Finance. He was Chairman of SACE from 2001 to 2005. From June 2005 to December 2011, he was a member of the Executive Board of the European Central Bank. From 2012 to 2016, he was Chairman of the Board of Directors of SNAM (Italy). From 2016 to 2019, he was Chairman of the Board of Directors of Italgas (Italy). 

Elke König was Chair of the Single Resolution Board (SRB) until January 2023 and has then become a Senior Fellow at SAFE. She was President of the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) from 2012 until 2015. She was also a representative of the Supervisory Board of the Single Supervisory Mechanism. After qualifying in business administration and obtaining a doctorate, she spent many years working for companies in the financial and insurance sector. 
From 1980 to 1990, she worked for KPMG in Cologne. From 1990 to 2002, König was a member of the senior management of the Munich Re Group as Head of Accounting.
She then moved to Hannover Rückversicherung AG as Chief Financial Officer. From 2010 to the end of 2011, König was a member of the International Accounting Standards Board (IASB) in London. 

The web seminar is a part of the SAFE Policy Lecture series aiming at fostering debates on policy-relevant issues.