Signature bank specializing in cryptocurrency
Silicon Valley Bank Shutdown
U.S. actively responds to concerns about financial crisis
Observation that “the conversion of interest rate freeze will be accelerated”
Following Silicon Valley Bank (SVB), the main bank for US tech companies, Signature Bank, a virtual currency bank headquartered in New York, USA, went bankrupt. It is the third U.S. bank bankruptcy news in a few days following Silvergate Capital, which voluntarily liquidated on the 8th (local time). The US federal government decided to fully guarantee SVB and signature bank deposits so that it would not spread into a full-scale financial crisis.
On the 12th, the New York State Department of Financial Services took over Signature Bank and appointed the Federal Deposit Insurance Corporation (FDIC) as bankruptcy trustee. As of the end of last year, the total assets of Signature Bank were $110.36 billion (approximately 146 trillion won). The second (SVB) and third (signature bank) major bank collapses in terms of asset size in US history occurred two days in a row.
As concerns over a bank run (large-scale withdrawal of deposits) spread, centering on small and medium-sized banks, the U.S. federal government took early action. The U.S. Treasury Department, the Federal Reserve System (Fed), and the FDIC issued a joint statement on the same day and announced that “SVB customers can guarantee all their deposits and withdraw their deposits from the 13th.” “We will take similar measures for signature banks and provide liquidity support to eligible banks in need of funds,” he said.
However, Treasury Secretary Janet Yellen drew the line, saying, “There will never be another bailout (as was the case during the 2008 financial crisis).” President Joe Biden repeatedly emphasized that “the US banking system is safe,” saying, “Deposits will be fully protected, but there is no support for investors and management.”
Although the urgent fire has been put out immediately, there are still concerns that the financial insecurity element caused by the rapid transition from the bubble formed during the pandemic to the high interest rate phase initiated by the Fed may burst at any time. Accordingly, there are also observations that the Federal Reserve may take a baby step to raise the base rate by 0.25 percentage points at the Federal Open Market Committee (FOMC) in March or even consider a freezing pivot (policy transition).
Financial markets in Korea and Asia, which opened immediately after the US government’s announcement of intervention, avoided ‘Black Monday’. On the 13th, the KOSPI closed at 2,410.60, up 0.67% (16.01 points) from the previous day. President Yoon Seok-yeol ordered his aides to “closely examine the impact on the domestic financial market and the real economy.”
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.