The ECB is worried about bank runs

The European Central Bank is asking banks to monitor social media to anticipate bank runs.

No bank runs with bitcoin…

The ECB has asked some banks to closely monitor social media activity in order to anticipate potential bank runs, reports Reuters.

The ECB seems to be concerned by the recent bank runs which have led to the bankruptcy of Silicon Valley Bank and Credit Suisse.

“Social media allows information to spread more quickly, but can also trigger or amplify shocks,” the ECB said in its financial stability report in November.

Reuters writes:

“Banks can run into financial trouble if customers rush to withdraw their deposits all at the same time. In October 2022, a social media post by a journalist claiming that ‘a major international investment bank is on the brink of collapse’ triggered a bank run on Credit Suisse, with clients pulling out more than 100 billion Swiss francs (116 billion dollars) by the end of that quarter.”

Steady lads pic.twitter.com/TesXRWeTkJ

— Daniel Batten (@DSBatten) January 24, 2024

The truth is there’s never smoke without fire. Credit Suisse customers left for good reasons, including repeated scandals and lawsuits involving money laundering from cocaine trafficking, among other sorted activities. Not to mention the collapse of several of its investment funds.

This information correlates with the fact that Swiss authorities are considering limiting withdrawals in the event of a bank run. We previously wrote in this article:

“The Swiss National Bank and the Swiss Finance Ministry recently started discussions with UBS, Raiffeisen Group, and Zürcher Kantonalbank. The considered measure raising eyebrows is to spread out withdrawals over time in the event of a Bank Run. In other words, fees (probably equivalent to the losses of the bank…) will be imposed on those who want to withdraw their money immediately. It is, at any rate, something that is being considered.”

In the Eurozone, the rule is that customers pay up in case of bankruptcy. “Bail-in” rather than “Bail-out”.

Incidentally, bank runs are also a headache for CBDCs. The ECB is planning a limit on CBDC holdings (€3000) specifically to prevent them.

It is laughable to think that monitoring (and censoring?…) social media could prevent bank failures. These failures are primarily the result of low economic growth, which necessarily accompanies the reduction of carbon energies (whether by choice or due to geopolitical tensions or physical limits).

In the absence of an energy miracle (which will not come), we will have more inflation and bank failures. All the more good reasons to place one’s savings in Bitcoin. As the CEO of BlackRock says, “bitcoin protects you.”