Bank of Italy scrutinises smaller banks' funding from online deposit platforms
Smaller Italian banks have increased reliance on funding they raise abroad through online deposit platforms, the Bank of Italy said on Wednesday, as regulators step up monitoring of the practice. The March 2023 banking turmoil, where rapid online deposit outflows led to the collapse of Silicon Valley Bank in the United States, has increased supervisory concerns about lenders' reliance on deposits that customers can withdraw with a click. After studies found that digital deposits can accelerate outflows at times of stress, regulators are checking whether they are adequately monitoring and measuring lenders' liquidity risks from their increased use of digital funding channels, the Bank of Italy said in its latest Financial Stability Report.
