The ECB is worried about Bank Runs

The European Central Bank asks banks to monitor social networks to anticipate bank runs.

No bank run with bitcoin…

The ECB has asked some banks to closely monitor activity on social media in order to anticipate possible bank runs, reports Reuters.

The ECB seems scalded by the recent bank runs which recently caused the bankruptcy of Silicon Valley Bank and Credit Suisse.

“Social media allows information to spread more quickly, but it can also trigger or amplify shocks”the ECB said in its financial stability report in November.

Reuters writing :

“Banks can run into financial difficulties if customers rush to withdraw their deposits all at once. In October 2022, a journalist’s social media post claiming that a ‘major international investment bank is on the brink of collapse’ led to a bank run on Credit Suisse, with clients withdrawing more than 100 billion francs Swiss ($116 billion) at the end of the fourth quarter of that year. »

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The truth is that there is never smoke without fire. Credit Suisse customers left for good reasons. Particularly because of the repeated scandals and trials for money laundering resulting from cocaine trafficking, among other joys. Not to mention the collapse of several of its investment funds.

This information should be compared with the fact that the Swiss authorities are considering imitating withdrawals in the event of a bank run. We wrote previously in this article:

“The Swiss Central Bank and the Swiss Ministry of Finance have recently started discussions with UBS, Raiffeisen Group as well as Zürcher Kantonalbank. The envisaged measure which raises eyebrows is to stagger withdrawals over time in the event of a Bank Run. In other words, fees (probably equivalent to the bank’s losses…) will be imposed on those who want to withdraw their money without delay. In any case, this is something that is being considered. »

The rule within the Eurozone is that customers go to the cash register in the event of bankruptcy. “Bail-in” rather than “Bail-out”.

By the way, bank runs are also a headache for CBDCs. The ECB provides a limit on CBDC holdings (€3,000) to avoid them.

It is laughable to think that monitoring (and censoring?…) social networks can prevent bank failures. The latter are above all the result of the weak economic growth which necessarily accompanies the reduction of carbon-based energies. (Whether it is chosen or suffered against a backdrop of geopolitical tensions or physical limits).

In the absence of an energy miracle (which will not come), we will have more inflation and bank failures. So many good reasons to invest your savings in Bitcoin. As the CEO of BlackRock says, “bitcoin protects you”.

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