Depositor Behaviour and Interest Rate and Liquidity Risks in the Financial System: Lessons from the March 2023 banking turmoil

What it contains

The report summarizes the FSB’s work to assess vulnerabilities of the global financial system at the intersection of solvency and liquidity risks with higher interest rates; investigate the deposit runs, including the role of technology, social media and interest rates; and assess how technology can affect the planning and execution of a resolution. It recalls that rates rose sharply in 2022 and 2023 after a decade of historically low levels and that the runs, the most serious disruption to the banking sector in more than a decade, were the proximate cause of the collapse of Credit Suisse and of the failure of three banks in the United States (SVB, Signature and First Republic).

On entity types, it concludes that the most vulnerable to the confluence of solvency and liquidity risks are banks, life insurers and nonbank real estate investors, because of their high proportion of rate-sensitive assets and liabilities. On the runs, it observes that the three fastest in March 2023 had outflows of around 20 to 30 % per day, 2 to 3 times faster than the highest one-day peak in past runs surveyed and well above the average 1 % per day; that the median outflow was 24 % of pre-run deposits, against 10 % in historical runs; and that the affected banks relied excessively on uninsured deposits.

On technology, it says it makes it easier and faster to transfer deposits and that some jurisdictions report a greater willingness to move funds depending on the rates offered, although there is little hard evidence. Among the implications, it argues that the speed of outflows requires reacting faster, for example by preparing in advance access to central bank liquidity facilities, and that in some cases the magnitude was such that no amount of liquidity would have prevented failure, so the underlying liquidity and solvency vulnerabilities must also be addressed.

Summary prepared by the Dominican Republic Risk Management Club from a reading of the original document, with the source verified on 7 October 2026. It does not replace reading the official text and is not advice.

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