Post-Crisis Financial Security Architecture in the Face of the 2023 Crisis Episode

Buczak, Maciej (2026): Post-Crisis Financial Security Architecture in the Face of the 2023 Crisis Episode.

Abstract

The aim of this article is to analyse the 2023 crisis episode - the failures of regional US banks - from the perspective of the effectiveness of the post-crisis financial safety architecture developed in the aftermath of the 2008 global financial crisis. Drawing on a review of the literature and regulatory documents, the article reconstructs the sequence of events, identifies their causes, and confronts them with the paradigms underlying modern banking supervision. The analysis shows that the banks involved in the crisis episode met their capital requirements and, in many cases, their liquidity requirements as well. The source of the problems lay in qualitative factors: poor risk management, unsustainable business models, and inadequate supervision. The episode also revealed a new mechanics of banking crises - social media and digital banking compressed the timeline of deposit runs from days to hours, fundamentally altering the dynamics of tail risk events. The article's main conclusion is that the existing regulatory framework, built on the paradigm of normally distributed phenomena and quantitative risk measures, is ill-suited to this new reality. Distribution tails are fatter, and future crises may be more violent and harder to contain than previously assumed. The 2023 episode, though limited in scale, should be treated as a warning signal for the financial safety system as a whole.

• Item Type: MPRA Paper
• Language: English
• Keywords: banking crisis; systemic risk; prudential regulation; Basel III; tail risk; deposit run; digi-tal banking; Silicon Valley Bank
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C52 - Model Evaluation, Validation, and Selection; F - International Economics > F3 - International Finance > F37 - International Finance Forecasting and Simulation: Models and Applications; G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill

References

Acharya, V.V., Brunnermeier, M.K., Pierret, D. (2024), Systemic Risk Measures: From the Panic of 1907 to the Banking Stress of 2023, NBER Working Paper No. 33211, National Bureau of Economic Research, Cambridge MA, November 2024 (Revised July 2025).

Bank for International Settlements, Basel Committee on Banking Supervision (2017) Basel III: Finalising post-crisis reforms.

Bank for International Settlements, Basel Committee on Banking Supervision (2004). Interna-tional Convergence of Capital Measurement and Capital Standards: A Revised Framework. (Basel II).

Barr, M.S. (2023), Review of the Federal Reserve's Supervision and Regulation of Silicon Val-ley Bank, Board of Governors of the Federal Reserve System, Washington DC, April 28, 2023.

Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation (2019), Changes to Applicability Thresholds for Regulatory Capital and Liquidity Requirements, 84 Fed. Reg. 59230, November 1, 2019.

Board of Governors of the Federal Reserve System (2019), Prudential Standards for Large Bank Holding Companies, Savings and Loan Holding Companies, and Foreign Banking Or-ganizations, 84 Fed. Reg. 59032, November 1, 2019.

Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation (2023), Regulatory Capital Rule: Amendments Ap-plicable to Large Banking Organizations and to Banking Organizations with Significant Trading Activity, Notice of Proposed Rulemaking, July 27, 2023.

Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation (2026), Regulatory Capital Rule: Category I and II Banking Organizations, Banking Organizations With Significant Trading Activity, and Op-tional Adoption for Other Banking Organizations (ERBA NPR), Notice of Proposed Rule-making, March 19, 2026.

Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation (2026), Regulatory Capital Rules: Regulatory Capi-tal and Standardized Approach for Risk-weighted Assets (SA NPR), Notice of Proposed Rulemaking, March 19, 2026.

Board of Governors of the Federal Reserve System (2026), Regulatory Capital Rule: Risk-Based Capital Surcharges for Global Systemically Important Bank Holding Companies; Sys-temic Risk Report (FR Y-15) (G-SIB NPR), Notice of Proposed Rulemaking, March 19, 2026.

Correia, S., Luck, S., Verner, E. (2024), Failing Banks, NBER Working Paper No. 32907, Na-tional Bureau of Economic Research, Cambridge MA, September 2024 (Revised November 2024).

Daníelsson, J., Macrae, R., Uthemann, A. (2022), Artificial Intelligence and Systemic Risk, Journal of Banking and Finance, Vol. 140, 106290.

Daníelsson, J., Uthemann, A. (2025), Artificial Intelligence and Financial Crises, Journal of Financial Stability, Vol. 80, 101453.

Financial Stability Board (2023), 2023 Bank Failures: Preliminary Lessons Learnt for Resolu-tion, Financial Stability Board, Basel, October 10, 2023.

Gilchrist, S., Zakrajšek, E. (2012), Credit Spreads and Business Cycle Fluctuations, American Economic Review, Vol. 102, No. 4, pp. 1692-1720.

Hernández de Cos, P. (2026), The Quest for Supervisory Effectiveness, Speech at the BCBS-FSI High-Level Meeting for European Supervisors, Bank for International Settlements, Ba-sel, 22 May 2026.

Mandelbrot, B. (1963), The Variation of Certain Speculative Prices, Journal of Business, Vol. 36, No. 4, pp. 394-419.

Regulation (EU) 2024/1623 of the European Parliament and of the Council of 31 May 2024 amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valu-ation adjustment risk, operational risk, market risk and the output floor. (CRR III)

Reinhart, C.M., Rogoff, K.S. (2009), This Time is Different: Eight Centuries of Financial Fol-ly, Princeton University Press, Princeton.

United States Congress (2010), Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, July 21, 2010.

United States Congress (2018), Economic Growth, Regulatory Relief, and Consumer Protection Act, Public Law 115-174, 132 Stat. 1296, May 24, 2018.