More dangerous than the collapse of SVB Bank.. What is a “Bank Panic”?

The collapse of SVB had repercussions in America and all over the world, given that many huge companies depend on this bank, which is the largest banking institution that collapsed after the global financial crisis in 2008.

Analysts said that without a solution by Monday, other banks are likely to come under pressure if depositors worry about their savings.

“bank panic”

The New York Times reported that “bank panic” begins when people fear that their deposits are “at risk”, leading to increasing withdrawals from banks.

She added that bank panic may affect even “healthy” banks, highlighting that the increasing withdrawals eventually lead to the bankruptcy of many banks and companies.

To preempt the banking panic, US officials at the Federal Reserve, the Treasury Department and other agencies tried to allay fears last night by stressing that all customers can get their money.

The “New York Times” stated that the urgent intervention of US officials aims to “reduce the possibility of a banking panic.”

“fundamental measures”

Informed sources told Reuters that the US authorities are about to take “fundamental measures” to support deposits in SVB Bank and prevent the repercussions of its sudden collapse from spreading.

The Washington Post quoted three well-informed sources as saying that the US authorities are considering protecting all uninsured deposits in SVB, as well as intervening to prevent what they fear will be panic in the US financial system.

The sources said that President Joe Biden’s administration officials worked, at the beginning of this week, to assess the repercussions of the bank’s collapse on Friday, with a special focus on the emerging project financing sector and multi-branch banks.

Earlier today, US Treasury Secretary Janet Yellen said she is working with banking sector regulators to address this collapse.

It added that it was working to protect depositors, but ruled out a bailout plan.

Silicon Valley Bank, based in Santa Clara, California, is the 16th largest US bank with assets of $209 billion.




Arab Observer

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