Silicon Valley Bank collapse: A contagion risk?

On Sunday, the Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation announced that SVB depositors would have access to"all of their money" from Monday, and that American taxpayers will not have to foot the bill. FILE PHOTO

Eric Dor, economic studies director at the IESEG School of Management in Paris, noted that the current upheaval concerns smaller banks that cater to the tech sector. The US Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation announced a series of measures on Sunday to reassure individuals and businesses in the stability of the US banking system and guaranteed all deposits at SVB.

President Joe Biden sought to ease concerns on Monday, saying "Americans can have confidence that the banking system is safe." The situation could prompt the Fed to put a brake on its rate-hike campaign at its next policy meeting next week. US authorities also said that depositors at New York-based Signature Bank, which was shuttered on Sunday, would be "made whole".

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U.S. Treasury says Silicon Valley Bank, Signature Bank ‘not being bailed out’New policies adopted on Sunday by U.S. banking regulators will “wipe out” equity and bondholders in Silicon Valley Bank and Signature Bank of New York while protecting all customer deposits, a senior U.S. Treasury official said. | Reuters
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