What you need to know about the global banking crisis

March 2023 saw the global banking sector experience its most significant bout of turmoil since the 2008/9 financial crisis. The failures of Silicon Valley Bank and Signature Bank in the US, and vulnerabilities in other mid-sized banks, were met with swift and robust action from authorities. Nonetheless, the knock-on impact on investor sentiment exacerbated concerns over Credit Suisse, leading to its forced and not uncontroversial merger with long-time competitor UBS.

A full-blown banking crisis, akin to that seen in 2008/9, is unlikely, thanks to evolutions in financial regulation that have led banks to be much better capitalised. Credit conditions will likely be tighter, however, which will have a modest negative impact on global economic activity. Meanwhile, these developments seem likely to have implications for the future direction of financial regulation globally.