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Tuesday, March 21, 2023

The United States government shuts down Silicon Valley Bank

US Treasury Secretary Janet Yellen said today that the Government wants to avoid financial “contagion” after the failure of Silicon Valley Bank, but ruled out bailing out the entity, according to statements collected by AFP.

“We want to make sure that the problems that exist in one bank do not create contagion for other banks,” Yellen said in an interview with CBS.

The Deposit Insurance Agency (FDIC) took control of the government branch of Silicon Valley Bank (SVB) on Friday, on the verge of implosion under the effect of massive withdrawals from its customers.

If the big banks have been saved until now, several medium-sized or regional ones left the Stock Market this Friday, as happened in the First Republic of California, which fell by almost 30% in the sessions on Thursday and Friday, and the Subscription Bank, which after Wednesday night a third lost its value.

The Democratic Senator of Virginia, Mark Warner, this Sunday on the ABC channel stated that the announcement of the takeover bid for SVB financial institutions before the opening of the Asian markets “is the best solution”.

Futures contracts on symbolic indexes on the Tokyo and Hong Kong stock exchanges suggest a 2% drop at the open.

The crisis of 2008 and its lessons

For her part, Yellen says the reforms implemented after the 2008 financial crisis closed the door to bailing out the SVB. “During the financial crisis, there were investors and owners of big banks that were bailed out … and the reforms that were put in place, we’re not going to do that again,” he said.

In September 2008, to prevent the collapse of the financial system, the US authorities injected 100 billion dollars into the largest institutions of the market, money that the government later recovered.

Various people from finance and the world of new technologies have been advocates since Friday in support of SVB. Many say they are concerned, in addition to the stability of the banking system, about the repercussions of banking failures in the technology sector.

“Many small businesses are depositors that need to access their funds to pay their bills and employ tens of thousands of people” in the United States, Yellen noted. “There is a problem and we are working with the regulators to find a solution,” he adds.

On the other hand, the uproar over SVB’s situation has also spread to cryptocurrencies. The USDC digital currency, said to be “stable” because it is theoretically pegged to the dollar, has fallen since Friday after its creator Circle announced that it had left $3.3bn in SVB’s coffers.

Several other coins, which are supposed to protect cryptocurrency investors against the legendary volatility of this industry, were also affected, such as Dai or USDD.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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