(Bloomberg) — The euro area has very limited exposure to the fallout from Silicon Valley Bank‘s collapse and is able to manage such risks, according to Paschal Donohoe, president of the Eurogroup, which brings together the currency bloc’s finance chiefs.
(Bloomberg) — The euro area has very limited exposure to the fallout from Silicon Valley Bank‘s collapse and is able to manage such risks, according to Paschal Donohoe, president of the Eurogroup, which brings together the currency bloc’s finance chiefs.
He said the European Commission and the European Central Bank have been monitoring developments and will update ministers on the situation at a meeting in Brussels later on Monday.
“We’ve a very strong regulatory and resolution framework here in Europe,” Donohoe told Bloomberg Television in an interview. “But of course any banking development such as this does prompt questions, and of course we’ll discuss this today in the Eurogroup.”
French Finance Minister Bruno Le Maire said earlier that he didn’t see any risk of contagion.
“What happened in the US is very unique, with a bank that is exposed exclusively to the tech sector,” he told France Info radio. “There is not a specific alert for the French banking sector, and we are of course following the situation very closely.”
A Bank of France spokesperson said separately that the country’s banks weren’t exposed to SVB.
Silicon Valley Bank became the biggest US lender to fail in more than a decade, creating fears of contagion in tech and finance sectors around the world. In the euro zone, German financial regulator BaFin responded by freezing SVB’s branch in the country, though it said its operations didn’t pose a danger to financial stability.
Italian Finance Minister Giancarlo Giorgetti said he’s confident European authorities will intervene quickly to stem any fallout.
“We appreciate the speed with which US authorities have intervened and we are confident that, if needed, European authorities will also intervene with the same speed, and will evaluate any implications for the conduct of monetary policy and for financial stability,” he wrote in a message sent to reporters.
Risk Reminder
Eurogroup chief Donohoe said the situation is a reminder that risk and moments of change can happen very unexpectedly. Europe is well positioned, however, due to changes to the regulatory framework in the last decade, he said.
“We never have any reason to be complacent, we know how fast things can change, and it’s why in a timely way today we’ll be able to get an update on where things stand at the moment, but I am confident that we have the ability to manage these kind of risks,” he said.
Donohoe added that the European Union will be looking at how to support the tech sector to ensure it’s still in a position to grow and that its prospects are not significantly impacted.
“I think our banking system in Europe at the moment understands the risk within European and global tech very well and has the right measures in place to manage that risk and to be able to deal with it in the time ahead,” he said.
–With assistance from Morwenna Coniam, Max Ramsay, Alessandra Migliaccio and William Horobin.
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