Admin I Wednesday, July 19, 2023
BERLIN – The president of the German Central Bank has warned of the dangers of a bank run due to fake news and has touted expanded banking supervision to include social media monitoring.
The supervisors could then recognize at an early stage whether there is a risk of a so-called bank run, Joachim Nagel told the German news group Redaktionsnetzwerk Deutschland in comments published on Wednesday.
In a bank run, large numbers of savers withdraw their money from a bank at the same time. In the worst case, the financial institution could collapse.
The run on Silicon Valley Bank (SVB) in March this year showed that one had to be able to react faster, said Nagel. In the run on SVB, posts on social media had helped accelerate panicked investor withdrawals. The question is whether fake news could trigger a similar chain of events.
Nagel said that in South Korea a task force of the banking supervisory authority systematically monitors social media. This task force would then see early warning signs if something like this was on the horizon.
“We should consider this in Europe,” he said.
“We must not rest on our laurels, but must take a close look and sharpen up on ‘blind spots’ in supervision,” he added.
