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2023 Bank Failures: Preliminary lessons learnt for resolution

The first quarter of 2023 saw a series of bank failures, serving as a significant test for the international resolution framework established in response to the Global Financial Crisis. While the framework has proven effective in previous cases since 2008, the Credit Suisse failure marked a major event, involving a globally significant bank. Additionally, the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank highlighted that banks not classified as globally significant can still have critical implications in their failure.

 

This report delves into the distress cases that occurred in March 2023 and examines how authorities addressed these situations. It evaluates the impact on the resolution framework for globally significant banks and other systemically important institutions. Importantly, the report solely focuses on issues related to resolvability and the resolution framework, omitting discussions on prudential regulation or ongoing supervision.

 

The report outlines the following key points:

 

• Initial lessons learned for resolving globally significant banks and their planning.

• Initial lessons learned regarding the systemic importance of non-globally significant banks and the role of deposit insurance.

 

Furthermore, the report highlights areas that require additional attention for the effective implementation of the international resolution framework, which will be part of the future work of the Financial Stability Board.

Categories: Recommended Readings
Author: FSB