ECB’s Schnabel says European banking sector looks resilient amid turmoil in U.S.

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The European banking sector has not been directly affected by turmoil in the wake of the collapse of Silicon Valley Bank, so the effects on credit will likely be smaller than in the United States, European Central Bank board member Isabel Schnabel said Wednesday.

“It looks like our banks look rather resilient. Overall, I would say it looks like we have a somewhat smaller problem than we’re seeing in the U.S.,” Schnabel said in a discussion at the National Association for Business Economics.

European banks have not seen a general outflows of deposits, she said.

“There is a lot of analysis out there that all comes to the conclusion that the capitalization looks reasonably well, the liquidity situation looks good,” Schnabel said.

The ECB is going to look carefully at the non-banking sector, she added.

“You cannot exclude that what is happening now is having an impact on credit supply,” Schnabel said.

In general terms, this would have a “disinflationary effect” on the economy, which the ECB would have to take into account in its decisions.

“I think it is completely open, for now, how big that effect is going to be,” she said.

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