bank run. similar to bank runs in the past. different in that this bank run was a direct consequence of svb's specific business model. one that created a maturity mismatch : the interest rate on assets was fixed for longer than the interest rate on liabilities. on top of that, svb made little use of interest rate derivatives to hedge this risk. the name of the game was serious risk mismanagement. however, this only became apparent once interest rates started rising. when this happened, svb's interest expenditure rose faster than its interest income. as a result, net interest income fell and continued to fall. this was reinforced by the migration from non - interest bearing deposits – on current accounts – to interest bearing deposits – on the savings accounts and fixed - term deposits. when account holders got wind of the bank's weaker position, and the gimme, gimme, gimme - chant went viral on social media, a rapid outflow of savings followed. but due to the higher interest rates, the assets svb had to sell to absorb this outflow of liquidity, mostly bonds, had lost value. eventually, failure became inevitable. most of you know this, of course. but why didn't we see it coming? the short answer is : money, money, money - it's so funny. the longer answer has to do with risk mismanagement. svb's 2021 annual report shows that a 2 percent interest rate hike would have led to a 35. 3 percent decrease in capital by the end of 2021. if the basel interest rate risk standards had been in place, this would have set off a series of alarm bells. because, according to these risk standards, this position should not exceed 15 percent of capital. and if it were to exceed 15 percent, the financial supervisor should intervene. but the basel interest rate risk standards were not in place. so, it's not the case that the supervisor didn't hear the alarm bells. it's not that the alarm bells were quiet. it's that the alarm bells simply weren't ring, ring, ringing. so what can we learn from this? first and foremost – this case reaffirms that strong regulation makes for strong banks. the failure of svb was a shock to the financial system. and shocks are, by nature, hard to predict. we can't change that. so we need to deal with it. and to

bonds which are held to maturity on banks'balance sheets – should those unrealised losses be better reflected in the capitalisation of banks? and should we look at how instruments, that are not marked to market daily, are reflected in liquidity buffers? i don't have an answer to these questions. but i do think they should be addressed. so that we can learn everything there is to learn from what happened at svb. and of course, not only what happened at svb. because the problems at svb soon led the financial market to look at other banks – banks with the same combination of vulnerabilities, like first republic. these market concerns also found their way across the atlantic, to this side, to credit suisse, a bank that has suffered from a series of mismanagement problems in recent years, and that experienced previous outflows of deposits at the end of 2022. here, too, we witnessed a rapid succession of events. it took, almost literally, only one tweet to lead to the downfall of credit suisse. because, once an alleged s. o. s. was on the wire, additional deposit outflows quickly followed, credit suisse's share price fell, and its cds spread spiked. in the end, the swiss national bank provided additional liquidity assistance, and credit suisse was sold to ubs. 3 / 5 bis - central bankers'speeches finma, the swiss supervisor, used a supervisory, and not a resolution power, to enable this sale – and it came with a write - down of credit suisse's at1 securities. although the possibility of such a principal write - down was included in the relevant at1 prospectuses and mentioned on the bank's investor relations page, although investors were clearly informed that extraordinary public support could lead to such a write - down, and that at1 holders may suffer losses before equity holders, and although the coupons paid on the at1 - security well exceeded the roe - target credit suisse had communicated to its investors, finma's decision still took investors by surprise. this should encourage regulators to reflect on the role and functioning of at1 instruments in determining the capital position of banks. but let's go back a step, and ask : why not use resolution? or, with alfred nobel in mind, what similarities or differences with previous cases led to this strategy? in the aftermath of the global financial crisis, resolution framework