Addressing banks’ vulnerability to runs, part 2: Policy options

The banking turmoil in March 2023 was the most significant system-wide banking stress event since the global crisis. This second column in a two-part series discusses policy options to adjust bank regulatory and supervisory frameworks, considering pros and cons. Some options (such as narrow banking or full deposit insurance) appear impractical or too costly, while others require further analysis. Three policy proposals (amendments to liquidity requirements, enhancements to supervision policy, and recognition of funding fragilities in the computation of Pillar 2 requirements) could be implemented quickly to increase bank stability relative to liquidity risk.