July 20, 2024

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Economists warn that 186 US banks face the same fate as Silicon Valley |  News

Economists warn that 186 US banks face the same fate as Silicon Valley | News

from Stady It shows that as many as 186 US banks could go bankrupt if half of their depositors quickly withdraw their money.

The problems at Silicon Valley Bank were caused by such bank inflows. The bank has accumulated a lot of assets in recent years, mainly from startups and companies in the technology sector. I invested a lot of money in government loans, but due to the deteriorating economic situation, many of the bank’s clients wanted more of their money. If the SVB sells government bonds before the end of the term, the bank receives much less money due to the interest increase. That is why the bank wanted to raise money by issuing shares, but this report led to unrest among customers.

The study shows that 186 US banks hold a significant portion of their assets in interest rate sensitive financial instruments. The value of those old, low-interest investments has fallen sharply since the US Federal Reserve raised interest rates last year.

In the case of the Silicon Valley bank, the US government stepped in and guaranteed the assets of all customers. This is while assets are only insured up to a maximum of $250,000. The collapse of Silicon Valley Bank caused panic in the stock markets, after which Signature Bank, First Republic Bank and other regional US banks ran into trouble.

look. The collapse of two US banks raises fear in stock markets

In Europe, panic led to major unrest around the Swiss bank Credit Suisse. The Swiss Central Bank has already pledged billions of dollars to support Credit Suisse. However, the 167-year-old bank’s stock fell on the Zurich Stock Exchange on Friday. Talks are currently underway regarding the acquisition of Credit Suisse.

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Pierre Wench, Governor of the National Bank, stated today in “De Tijd” that Belgian banks are among the strongest in Europe. “Today it is very difficult to imagine a scenario in which we slide into a financial crisis,” says Wunsch. “We have no information that banks in Europe are at risk.”