Governor Bailey appeared before the Treasury Select Committee on Tuesday, stating that officials are closely monitoring market conditions. He also mentioned that tighter regulations were being considered following the collapses of Credit Suisse and Silicon Valley Bank, which he compared to the rapid downfall of the British merchant bank Barings in 1995.

Despite these events, Mr Bailey maintained that the UK banking sector is “very strong” and that the issues affecting both Silicon Valley Bank and Credit Suisse were unique and unlikely to threaten the broader global financial system. He referred to the recent market movements, which led to significant declines in Deutsche Bank’s market capitalisation and the Europe Stoxx 600 banks index, as a way for investors to test firms.

Deputy BoE governor Dave Ramsden echoed this sentiment, noting that the situation had become “calmer” following the UBS-Credit Suisse merger.

Sam Woods, head of the BoE’s supervisory division, joined global calls for tightening liquidity rules to ensure banks have sufficient cash to meet expected withdrawal demands. Both Silicon Valley Bank and Credit Suisse experienced runs on deposits that contributed to their demise, leading to questions about the adequacy of current liquidity coverage ratios. Mr Woods suggested “recalibrating” the metric.

He also raised the issue of whether the BoE should alter the criteria for categorising banks as subsidiaries rather than branches, as subsidiaries are subject to tighter supervision and required to maintain their own financial resources.

Current Prudential Regulation Authority guidelines designate branches by the number of retail and small business customers and deposits covered by the UK compensation scheme.

Furthermore, officials cautioned against expanding exemptions to ringfencing rules, which separate retail lending from riskier trading activities. HSBC received such an exemption during its acquisition of Silicon Valley Bank’s UK business. Mr Woods warned against creating a “massive” loophole in the ringfence, which is unique to the UK and under government review.