The Quiet after the Storm: Why We Should Worry about the Banking Sector

When is the right moment to deal with (or worry about) banks? If we look at Google Trends, we see that in recent years, only on three occasions have banking issues disturbed people’s sleep: 2008 (the great financial crisis), 2020 (the pandemic), and 2023 (the crisis of regional American banks). In all three cases, the concern lasted briefly: a month or two at most.

But to be truly aware and effective, policymakers and depositors should harbor doubts especially when there appear to be no clouds on the horizon. That is the most fruitful and least costly time to understand and, if necessary, act.

This could be one of those moments. The two years since the last crisis of U.S. regional banks are coming to a close. A crisis that, without warning, shook the American financial system and part of the global system. What happened, and why? Which lessons are still relevant today?

To answer these questions, we must pay attention to three things: how that crisis began, how it was resolved, and what consequences it had—or did not have—elsewhere in the world. Some answers can be found in a report published a few months ago by CEPR, the economic research institute based in Paris, written by the author together with a group of European and American experts.