ECB’s Nagel: Should Be Flexibility in Managing Banking Crises

6 December 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Wednesday said in the context of Credit Suisse's financial problems this year that there should be flexibility in dealing with information on banking crises.

In a panel discussion during an event at the German Bundesbank, which he heads, Nagel said that markets did not need to have access to every detail about a crisis because ‘[i]f you give too much clarity to the market participants this could also be used in, let me say, in a different, not so helpful way.’

‘[A]t the end you need a certain flexibility, you need a certain discretionary room to manoeuvre, and you need also, I believe, constructive ambiguity. It shouldn’t be clear to everyone – this is my point here’, he said.

The market reaction was one of the triggers for the Credit Suisse crisis, he recalled.

During a crisis, it was not enough to go through a checklist and believe the problem would be over, he said. Disclosing all information was not the most effective reaction either, he said.

I’m not so sure if that transparency, 100% transparent in how to solve things and how to resolve things, is the right way to do it in the crisis situation’, he said.