The chair of the Financial Stability Board (FSB) has called on central banks to “take action” following recent shocks to the global banking sector.

In a letter to G20 financial ministers and central bank governors, Klaas Knot said that while financial reforms issued after the 2008 global financial crisis meant that the sector is “better placed to absorb adverse shocks”, authorities must “remain vigilant”.

“Still individual institutions can fail, particularly when weaker business models and risk management capabilities are exposed, as they were recently by tighter financial conditions and liquidity challenges,” wrote Klaas, likely referring to the recent collapses of Silicon Valley Bank (SVB) and Credit Suisse.

He continued: “These recent events highlight that we cannot be complacent.”

Credit Suisse, the second-largest bank in Switzerland, collapsed last month following over a year of reports about the financial institution's stability. The shockwaves caused by the collapse of Silicon Valley Bank and a subsequent run on deposits ultimately proving too much for Credit Suisse to weather. It was recently taken over by domestic rival UBS in a deal worth around $3.3 billion.

“Unlike most other recent shocks, this latest episode had its origins within the financial system,” said Klaas, who is also president of the Netherlands' central bank. “So the need for financial authorities to learn lessons, and act upon them, is all the greater.”

The FSB chair called for the “full, timely and consistent” roll out of international financial standards, describing this as crucial to ensuring global financial stability.

“The recent challenges within the banking sector are a reminder that financial stability is not merely an abstract concept,” he said.

The letter also urged ministers to establish greater collaboration on cyber-attack reporting across financial authorities, suggesting this would facilitate "easier exchange of information at critical points" and promote "greater efficiency of cyber incident reporting requirements for globally active financial institutions".

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