The European Central Bank has asked some banks to closely monitor activity on social media to detect a worsening in sentiment which could lead to a deposit run, two banking executives with knowledge of the request told Reuters.

European regulators have sharpened scrutiny of banks' liquidity after the collapse of Silicon Valley Bank and Credit Suisse in March last year, the people said, requesting anonymity because the discussions are private.

Banks can run into financial trouble if clients rush to pull deposits at the same time. In October 2022, a social media post from a journalist saying that a 'major international investment bank is on the brink', led to a run on Credit Suisse, with clients withdrawing more than 100 billion Swiss francs ($116 billion) by the end of the fourth quarter of that year.

The speed at which clients yanked deposits has triggered a debate globally on whether, under the current regulation, institutions can withstand sudden liquidity shocks, and whether new rules might be needed.

In March, the European Banking Authority, an independent European agency which carries out work in the banking and financial sector, called on relevant regulators to assess risks including social media that could "contribute to a deterioration in the public perception and reputation of the institution".

In response to the ECB's requests which were specific to certain banks in the region, a major European lender has arranged for a team to signal significant volumes of negative posts to the bank's treasury, which will in turn assess any impact on deposits, one of the two executives said....

 more at Reuters