“The penny dropped during the crisis,” says Haldane. It took that event, he says, to open financial regulators’ minds to the idea that the risk of an individual bank failing should really be reflected through the damage it might do to the system; and that depends on how deeply the bank is connected to other parts of the financial system.
Haldane’s latest comments follow a number of notable banking failures over the past month, which has renewed fears over financial instability., based in Santa Clara, California, which mostly lent money to technology start-up companies, saw depositors withdraw US$42 billion. The California state regulator closed the bank and its UK arm was subsequently absorbed by multinational bank HSBC for £1 . Two days later, New-York-based Signature Bank also closed.
According to Stefano Battiston, who studies systemic risks in financial networks at the University of Zurich, Switzerland, the roots of SVB’s failure are rapid interest-rate increases that are being seen globally. For several decades, rates have been low and many banks have put money into seemingly safe interest-bearing bonds. But as interest rates have rocketed, these bonds have rapidly lost value.
On 8 March, SVB announced that it needed to raise $2.25 billion to cover such asset shortfalls. Sensing trouble, the bank’s customers rushed to withdraw their deposits, creating a run on the bank. Its stock price crashed and 48 hours later, it was closed by regulators, the fastest bank closure in US banking history. Although SVB was an outlier, other banks are at risk, Battiston says, especially those that are more connected to other banks.
by Stephan Bales and Hans-Peter Burghof, who both study banking at the University of Hohenheim, Germany. The researchers looked at tweets and Google search data during the days when SVB called out for more capital, until its eventual closure. They found that the most intense period of Twitter activity corresponded with the bank’s collapsing stock price on 9 March.
The Biden administration is eating too much of the bones and flesh of the Korean economy and diplomacy. It's predatory. They are demanding the release of original technologies for batteries and semiconductors. From a distance, it is also a loss for the United States.