London Daily

Focus on the big picture.
Friday, Oct 31, 2025

Banks 'may need more liquidity buffers' to cope with runs in future, BoE governor Andrew Bailey warns

Banks 'may need more liquidity buffers' to cope with runs in future, BoE governor Andrew Bailey warns

The Governor of the Bank of England said online technology risked speeding-up crises - but reaffirmed his conviction that there are no systemic problems.
Andrew Bailey has called into question whether UK banks have large enough cash buffers to cope with crises similar to the recent run on Silicon Valley Bank.

The Governor of the Bank of England (BoE) said last month's turmoil, which led to the rapid takeovers of the bank's US and UK arms, served as a warning that rushes to withdraw deposits can now go "further much more quickly" thanks to online technology.

The collapse of the bank sparked jitters across the globe, with UBS stepping in to save its Swiss rival Credit Suisse, while bank shares also slid, before markets later calmed.

Speaking at an event in Washington DC, Mr Bailey cautioned: "We can't assume that, going forwards, the current answer on the total size of liquidity protection is the correct one.

"We saw with Silicon Valley Bank that with the technology we have today - both in terms of communication and speed of access to bank account - runs can go further much more quickly.

"This must beg the question of what are appropriate and desired liquidity buffers that create the time needed to take action to solve the problem."

But he also reaffirmed his conviction that reforms introduced after the 2008 financial crisis had "worked", adding: "I do not believe we face a systemic banking crisis."

"When I look at the UK banks, they are well capitalised, liquid and able to serve their customers and support the economy," he added.

Mr Bailey acknowledged that requiring banks to hold larger buffers risked having an impact on economic growth.

He told his audience at the Institute of International Finance: "A common outcome of... increasing the broader liquidity buffers of banks and non-banks could be to create a constraint on lending and investment in the real economy.

"For the UK economy this would go against the need to finance investment to support stronger potential growth, from its current weak level."

And the governor said banks and non-banking financial institutions could not be expected to hold ever larger liquidity buffers to cover unforeseeable 'Black Swan' events, and said it was preferable for central banks to have tools to act with "temporary and targeted interventions".

Lessons to be learnt

Mr Bailey's comments on online technology come after his deputy Sam Woods told MPs on the Treasury Committee last month that banks needed to consider how easily deposits can be withdrawn electronically in seconds.

The governor later told a separate event, hosted by the International Monetary Fund, that he believed lessons could still be learnt from the recent turmoil - despite his insistence that there were no systemic issues - such as how to adapt to the speed and ease with which deposits could now be withdrawn.

"There are learning points from these issues that we have run into," he told an audience in Washington DC. "We will have to spend a lot of time thinking these things through."

Mr Bailey also reiterated he did not see the makings of another 2008 financial crisis as "the system is in a much more robust condition". And he added: "we've got a lot more tools in the armoury [now]".
Newsletter

Related Articles

0:00
0:00
Close
US and China Agree One-Year Trade Truce After Trump-Xi Talks
BYD Profit Falls 33 % as Chinese EV Maker Doubles Down on Overseas Markets
US Philanthropists Shift Hundreds of Millions to UK to Evade Regulatory Uncertainty in Trump Era
Israeli Energy Minister Delays $35 Billion Gas Export Agreement with Egypt
King Charles Strips Prince Andrew of Titles and Royal Residence
Trump–Putin Budapest Summit Cancelled After Moscow Memo Raises Conditions for Ukraine Talks
Amazon Shares Soar 11% as Cloud Business Hits Fastest Growth Since 2022
Credit Markets Flooded with More Than $200 Billion of AI-Linked Debt Issuance
U.S. Treasury Secretary Scott Bessent Says China Made 'a Real Mistake' by Threatening Rare-Earth Exports
Report Claims Nearly Two Billion Dollars in Foreign Charity Funds Flowed into U.S. Advocacy Groups
White House Refutes Reports That US Targeting Military Sites in Venezuela
Meta Seeks Dismissal of Strike 3’s $350 Million Copyright Lawsuit
Apple Exceeds Forecasts With $102.5 Billion Q3 Revenue Despite iPhone Miss
Israel's IDF Major General Yifat Tomer-Yerushalmi Admits to Act Amounting to Aiding Hamas During Wartime (Treason)
Shawbrook IPO Marks London’s Biggest UK Listing in Two Years
UK Government Split Over Backing Brazil’s $125 Billion Tropical Forest Fund Ahead of COP30
J.K. Rowling Condemns Glamour UK Feature of Nine Trans Women as 'Men Better at Being Women'
King Charles III Removes Prince Andrew’s Titles and Orders His Departure from Royal Lodge
UK Finance Minister Reeves Releases Email Correspondence to Clarify Rental-Licence Breach
UK and Vietnam Sign Landmark Migration Deal to Fast-Track Returns of Irregular Arrivals
UK Drug-Pricing Overhaul Essential for Life-Sciences Ambition, Says GSK Chief
Princesses Beatrice and Eugenie Temporarily Leave the UK Amid Their Parents’ Royal Fallout
UK Weighs Early End to Oil and Gas Windfall Tax as Reeves Seeks Investment Commitments
UK Retail Inflation Slows as Shop Prices Fall for First Time Since Spring
Next Raises Full-Year Profit Guidance After Strong Third-Quarter Performance
Reform UK’s Lee Anderson Admits to 'Gaming' Benefits System While Advocating Crackdown
United States and South Korea Conclude Major Trade Accord Worth $350 Billion
Hurricane Melissa Strikes Cuba After Devastating Jamaica With Record Winds
Vice President Vance to Headline Turning Point USA Campus Event at Ole Miss
U.S. Targets Maritime Narco-Routes While Border Pressure to Mexico Remains Limited
Bill Gates at 70: “I Have a Real Fear of Artificial Intelligence – and Also Regret”
Elon Musk Unveils Grokipedia: An AI-Driven Alternative to Wikipedia
Saudi Arabia Unveils Vision for First-Ever "Sky Stadium" Suspended Over Desert Floor
Amazon Announces 14 000 Corporate Job Cuts as AI Investment Accelerates
UK Shop Prices Fall for First Time Since March, Food Leads the Decline
London Stock Exchange Group ADR (LNSTY) Earns Zacks Rank #1 Upgrade on Rising Earnings Outlook
Soap legend Tony Adams, long-time star of Crossroads, dies at 84
Rachel Reeves Signals Tax Increases Ahead of November Budget Amid £20-50 Billion Fiscal Gap
NatWest Past Gains of 314% Spotlight Opportunity — But Some Key Risks Remain
UK Launches ‘Golden Age’ of Nuclear with £38 Billion Sizewell C Approval
UK Announces £1.08 Billion Budget for Offshore Wind Auction to Boost 2030 Capacity
UK Seeks Steel Alliance with EU and US to Counter China’s Over-Capacity
UK Struggles to Balance China as Both Strategic Threat and Valued Trading Partner
Argentina’s Markets Surge as Milei’s Party Secures Major Win
British Journalist Sami Hamdi Detained by U.S. Authorities After Visa Revocation Amid Israel-Gaza Commentary
King Charles Unveils UK’s First LGBT+ Armed Forces Memorial at National Memorial Arboretum
At ninety-two and re-elected: Paul Biya secures eighth term in Cameroon amid unrest
Racist Incidents Against UK Nurses Surge by 55%
UK Chancellor Rachel Reeves Cites Shared Concerns With Trump Administration as Foundation for Early US-UK Trade Deal
Essentra plc: A Closer Look at a UK ‘Penny Stock’ Opportunity Amid Market Weakness
×