This appreciation, Yellen acknowledged, is derived from the bankruptcy two weeks ago of the Silicon Valley Bank and Signature Bank.
“It is important that we re-examine whether our current supervisory and regulatory regimes are adequate for the risks banks face today and we must act to address these risks if necessary,” the secretary said.
Yellen insisted that despite what happened, there has been “relative stability in the banking sector in general this month, even as concerns about specific institutions have grown.”
“To be clear, the banking system is significantly stronger than it was before the global financial crisis (…) Today the US banking system is strong, even when it has been under pressure,” he said.
Yellen also defended the actions of the US government after the bankruptcy.
“We have used important tools to act quickly to prevent contagion, and they are tools we could use again. The aggressive measures we have taken ensure that Americans’ deposits are safe, and we would be prepared to take additional measures if warranted,” he said.
On March 12, the United States regulatory bodies launched a plan to protect the deposits of Silicon Valley Bank (SVB) and Signature Bank after their collapse.
The Treasury Department, the Federal Reserve (Fed) and the Federal Deposit Insurance Corporation (FDIC) announced that customers would have access to all money deposited in these entities.
The Fed also launched a liquidity line for banks with financing difficulties in order to prevent mistrust from spreading to other entities and so that what happened did not bring about a deeper financial crisis.