After the 2008 ‘unpredictable’ Great Financial Crisis (GFC), central banks and financial regulators have assured us that the causes and issues of financial instability had been addressed. Having Basel III requirements and other financial regulations in place was supposed to make banks more secure and solid. More recently, many central bankers, regulators and auditors assured us of the soundness of the financial and banking sectors.

However, recent financial events like the collapse of Silicon Valley Bank (SVB) and Signature Bank, the rescue of First Republic, as well as the enforced merger of Credit Suisse with USB (and on minor level the acquisition of SVB UK by HSBC for £1), have again raised the question of the financial fragility of the global financial system. It also raises many other questions and in this short piece, our focus is on the impacts of monetary policy on financial stability and the role played by regulators.