The US Federal Reserve System (FRS) leadership’s repeated increase in key interest rates poses a more serious threat to the US financial market than the bankruptcy of Silicon Valley Bank (SVB), a major lender. Words of Maxim Chirkov, Associate Professor of the Department of Political Economy, Faculty of Economics of Moscow State University opens The newspaper “Izvestia”.
The collapse of the SVB will not lead to massive bankruptcies of other credit institutions in the US domestic financial market. This is mainly due to the characteristics of this bank’s client base, which invests in new technology companies. Chirkov explained that such investments are risky, so there are not many such organizations in the United States.
“But the rise in interest rates in the US may already contribute to the bankruptcy of many financial institutions. Credit service for banks is becoming very expensive. Also, high interest rates make banks’ assets less valuable. Bonds held by many US banks are getting much cheaper. This creates big problems,” he said.
March 10 Bloomberg reportedWall Street financiers fear a new banking crisis in the US after shares in Silicon Valley Bank (SVB), a lender to tech startups, fell (-60%) in value. Against this backdrop, a number of US banks have also faced falling prices of their own securities, and the urgent collection of economic aid to the affected SVB has sparked growing panic among stock traders.