Tim Adams
Anjali Sundaram | CNBC
According to Tim Adams, CEO of the Institute of International Finance, the turmoil in the banking sector that led to the collapse of several lenders was not a systemic crisis and has now subsided. .
The The fall of Silicon Valley Bank in early March – the biggest bank bust since the global financial crisis – caused a wave of market panic that swept the sector in Europe and the United States.
A flight of shareholders and depositors culminated in the demise of Credit Suissewith the Swiss government 167 year old junior emergency rescue broker by a domestic competitor UBS.
Less Signature Bank has been closed by regulators states, while the giants of Wall Street stepped in to make it 30 billion dollars in deposits in the First Republicbuy time from lenders in the area to set up a survival plan.
Since then, the market has stabilized, leading many to conclude that the problems are only with troubled banks and do not pose systemic risk. However, the knock-on effect has dented the economic outlook in many advanced economies.
Speaking to CNBC on the sidelines of the International Monetary Fund’s Spring Meeting in Washington DC on Tuesday, Adams said the March turmoil was “a period of market turmoil or turmoil,” but dismissed the view. called it a “crisis”.
“We have more than 4,000 banks in the US, we have about 10,000 banks globally that are part of SWIFT and 35,000 financial institutions around the world — 99.999% of which opened last month. passed and had no problems — [it’s] really just a couple of institutions with a distinct style,” Adams told CNBC’s Joumanna Bercetche.
“So I don’t think it’s a crisis, I think it’s market turbulence, it has subsided, it has stabilized, but we need to be vigilant and we need to watch the tensions.” another straight line in the system.”
The IIF is a global trade body for the financial services industry, with approximately 400 members in more than 60 countries. Adams said members’ primary concern was the risk of a slowdown in growth, particularly in advanced economies.
The IMF on Tuesday lowered its five-year global growth forecast to around 3%, marking the lowest medium-term forecast in the IMF’s World Economic Outlook since 1990.
The D.C.-based institution’s chief economist Pierre-Olivier Gourinchas told CNBC on Tuesday that turmoil in the banking sector has undermined growth prospects, especially as central banks The rapid tightening of monetary policy has sharply increased lenders’ funding costs and increased vulnerabilities.
“There are risks, there are geopolitical risks that we can talk about, but the downside risks are real and we just don’t know how deep they are,” Adams said.
“The Fed is likely to tighten again, we have other central banks in Europe and the UK tightening, so there are risks to the downside.”
Regulators in the United States and Europe acted quickly to quell the risk of contagion in the face of multiple bank failures last month. However, US Treasury Secretary Janet Yellen confirmed on Tuesday that the banking system remains well capitalized with ample liquidity.
Adams suggests that many of the regulators he spoke to, including those involved in the development of the Dodd Frank and Basel III frameworks in the aftermath of the financial crisis, do not believe that major regulatory changes is necessary during this time.
“It’s a very different system from [what] prevalent in 2007, 2008. I think we need to better understand what happened in some organizations like SVB, I think we need to ask what happened to surveillance, but I don’t think we will see regulatory changes,” he added.
