March 20 (SeeNews) - Slovenia's central bank Banka Slovenije has adequately prepared for the risks stemming from the failure of banks in the U.S. and Switzerland, governor Bostjan Vasle said.
"In the light of the great uncertainty in the financial markets in recent days, especially in the USA and Switzerland, we emphasise that Banka Slovenije has adequately prepared for such risks and in the last year, among other things, increased the capital requirements for banks in Slovenia," Vasle said in a statement on Friday.
Earlier this month, U.S.-based Silicon Valley Bank (SVB) failed amid a run on its deposits caused by series of central bank-endorsed interest rate hikes aiming to limit the global inflation surge. Another US lender, Signature Bank, was closed by regulators days later due to systemic risks, and on Sunday, Swiss multinational bank UBS agreed to buy Credit Suisse to prevent its imminent insolvency.
The Slovenian banking system remains resistant to systemic risks, and its liquidity also remains high, Vasle said in a comment after the monetary meeting of the European Central Bank (ECB) Governing Council.
"Inflation in the euro area will slow down faster than previously expected and will average 5.3% this year. In 2024 and 2025, with the normalisation of cost pressures and the disinflationary effects of a tighter monetary policy, a further slowdown in price growth is expected. Inflation will be 2.9% in 2024 and 2.1% in 2025," Vasle said.
On March 16, the ECB Governing Council decided to raise its three key interest rates by 50 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.50%, 3.75% and 3.0%, respectively, with effect from March 22, 2023.