The Limited Times

Now you can see non-English news...

United States: SVB and Signature Bank presented a “serious risk of contagion”, according to Yellen

2023-03-16T18:25:15.738Z


“We considered that there was a serious risk of contagion of massive withdrawals” declared the American secretary to the Treasury.


US Treasury Secretary Janet Yellen tried on Thursday to convince US parliamentarians of the soundness of the US banking system after the bankruptcy of the SVB bank, while the setbacks of the Swiss Credit Suisse raise the specter of an infection.

Heard by members of the Senate Banking Committee, she tried to "

reassure them (...) that our banking system remains solid and that Americans can be certain that the money they have deposited will be available when they need it

."

"

This week's actions demonstrate our resolute commitment to ensuring the security of depositors' savings

," the US Treasury Secretary said.

On Sunday, the American authorities announced that they were going to guarantee the withdrawal of all deposits from SVB and allow access to all deposits from Signature Bank, a New York establishment which was automatically closed on Sunday by the American regulator.

In addition, the Federal Reserve (Fed), the US central bank, has agreed to lend the necessary funds to other banks that need them to honor withdrawal requests from their customers.

We considered that there was a serious risk of contagion of massive withdrawals

” among customers who had funds above the guaranteed amounts, “

which could have brought down many banks and triggered panics

”, underlined Janet Yellen.

The FDIC, which is the banking regulator, thus guaranteed that all customers of SVB and Signature Bank would have access to all of their funds, including beyond the usual limit of 250,000 dollars.

Read alsoBertille Bayart: “SVB, small bank, big consequences”

Risk of contagion

One of the reasons we stepped in and declared (this) exception (…) is that we recognize that there can be contagion in situations like this, and that other banks can then experience a similar panic, which we want to avoid

, ”explained the minister.

Thus, “

we worked with the Federal Reserve and the FDIC to protect all depositors of the two failed banks.

On Monday morning, customers were able to access all the money in their deposit accounts

,” she recalled.

But “

shareholders and creditors are not protected by the government

”.

It is important to note that taxpayers' money is not being used or put at risk with this action

,” the minister stressed.

The situation on the banking front has been rocking global markets since the end of last week.

The banking giant Credit Suisse is in turmoil.

On Wednesday, it suffered the worst session in its history on the stock market, plunging by more than 24%, pushing the central bank to come to its rescue by making available up to 50 billion francs of liquidity (50.8 billion euros). euros) to reassure the markets.

On Thursday, the title Credit Suisse went up the slope, closing with a gain of more than 19%.

Source: lefigaro

All news articles on 2023-03-16

You may like

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.