Claudia Buch: Resilient retail banking - setting the course towards a robust financial sector

Speech by Prof Claudia Buch, Vice-President of the Deutsche Bundesbank, at the 21st Retail Banking Day of the "Börsen-Zeitung": Next level banking – digital, smart and sustainable, Frankfurt am Main, 8 May 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Check against delivery.

Ladies and gentlemen,

I am delighted to be here to speak to you today for the 21st Retail Banking Day of the "Börsen-Zeitung". 

For financial markets, the past few weeks have been anything but a quiet start to spring: failures of banks, interventions by governments and central banks, and concerns of a looming financial crisis – these are all more reminiscent of a gathering autumn storm.

But how justified are these concerns? What lessons do we need to learn from the experiences of recent weeks – both for banks' risk management and governance as well as for supervision and regulation? Have we underestimated the risk of financial crises? Is the financial system sufficiently resilient to shocks? 

It is certainly too early to provide any definitive answers to these questions. Last week, US supervisory authorities outlined the lessons they had learned,[2] whilst in Switzerland, the repercussions of current developments are under intense discussion. In other countries, too, supervisors and regulators will respond. 

This is because these developments in global markets are a reflection of how the financial system has become more vulnerable in recent years. The macroeconomic environment has changed considerably – higher interest rates and heightened uncertainty are likely to stick around for some time to come. The economy and the financial system have been able to cope with the major shocks of recent years relatively well, due not least to comprehensive fiscal and monetary policy measures. Credit risk and insolvencies in the corporate sector have so far been low. However, this harbours the danger that future risks will be underestimated.