I recently had a chat with Mitch Joel on his podcast show, “Six Pixels of Separation.” We discussed the ongoing massive disruption in the economy and finance industry and the next financial crisis. As I told Mitch, if we follow the Basel regime, every iteration becomes increasingly ephemeral – Basel I was based on hard mortgages sitting in the balance sheet of the banks, Basel II started including “market discipline” and Basel III started including liquidity ratios to cater for even more ephemeral assets that are difficult to assess when there is a market failure. We are not at Basel 4 yet, but the failure of Silicon Valley Bank (SVB) and Signature Bank’s were caused by the speed of withdrawals in digital banking. No amount of liquidity can guard against the speed of digital failure which in turn was driven by nothing more than the perception of their depositors.
Listen to the episode:
Watch the full interview above.