In my 43 years in the financial industry, I have experienced a number of financial crises—from the collapse of the Japanese bubble economy to the 1997 Asian Financial Crisis and the collapse of Lehman Brothers. In retrospect, they all seemed to start with subtle changes that grew into a much bigger crisis. This can also be said of most global financial crises. They begin as small problems that set off a chain of negative events, trigger severe market instability and put the entire financial system at risk. These small issues—and the potential to develop into more serious problems—are often underestimated until a crisis becomes apparent.

The collapse of U.S. lender Silicon Valley Bank (SVB) in March 2023 is still fresh in our minds. The incident created uncertainty across financial markets and sent ripples through European markets resulting in UBS's acquisition of Credit Suisse. Markets seem to have stabilized for now, but one must wonder if the seeds of a financial crisis have been completely extinguished.

Advances in digital technologies have led to dramatic changes in the financial sector. In SVB's case, information spread on social media and depositors withdrew large amounts of money in a short period of time, including through online banking. In addition, inflation in G7 countries is at its highest in 40 years, making it a top concern for many policymakers. While the Bank of Japan has maintained its monetary policy, central banks in the US and Europe have raised benchmark interest rates at an unprecedented pace to combat inflation, bringing the era of "ultra-easy" monetary policy to an end. We must not forget that the environment surrounding the financial industry has undergone significant structural change.

American author Mark Twain said: "History does not repeat itself but it often rhymes." This is a reminder to us as market participants of the importance of learning lessons from the past. The majority of financial institutions have healthy balance sheets and I believe a global financial crisis is unlikely to happen now. However, we must heed Mark Twain's words and pay careful attention so we do not miss the subtle signs of change.