The earthquake caused by the Silicon Valley Bank crisis shows a future full of uncertainties and consequences that are currently hard to predict. Initially confined to the United States, the problem spread to Europe at the hands of Credit Suisse, whose stock market listings were suspended amid a general collapse in banking in equity markets. An alarming picture that should lead to easing policy of interest rate hikes in an effort to avoid greater contagion, experts say. If this restriction is approved, it will be a relief for the industry in the province of Alicante, which has already started to delay investment plans in companies.
Fear of the financial crisis is still lurking in the markets after the bankruptcy of US banks Silicon Valley and Signature Bank, which spread fear among investors. As a matter of fact, fear spread across European stock markets yesterday when the collapse in Credit Suisse’s shares, which reached 30 percent on the Zurich stock exchange, led to the suspension of its quotation. Since the French Société Générale and Italian Monte dei Pachi and UniCredit have followed the same path, one thing has not ended here.
Additionally, amid volatility in Euribor, which fell from 3,858% to 3.5% in a single day on Tuesday, it resumed its uptrend yesterday despite recovering only half of its losses. ground. .
This storm also broke out just as the European Central Bank was scheduled to approve a new rate hike this Thursday., especially 50 basis points, to continue the fight against inflation. An increase that is currently being questioned after what has happened in recent days.
This is expressed by the prestigious economist José Carlos Díez, professor of Microeconomics and International Finance at the University of Alcalá de Henares, and CEO of the Global Economic Analysis consultancy, “markets are giving clear signals that rate hikes should be stopped or at least step back to send a message of calm and help curb financial instability. Nothing will happen to wait a reasonable amount of time, like a month, to see if the waters stop, and then start the fight against inflation all over again.
As to whether the problem could reach Spanish banks and cause a new financial crisis, Díez points out that Silicon Valley is a “very private bank with low-quality deposits that does not exist in Europe.” Deposits in Spanish banks are much more diversified and covered by a guarantee fund.so we have a protection dam ».
Ignacio Jiménez Raneda, former rector of the University of Alicante (UA) and professor emeritus of the Fundamentals of Economic Analysis, puts it in similar terms and does not hesitate to state: The current dynamic of interest rate increases “could spread problems to other banks”, is essentially small in size, so it would be reasonable to temporarily stop or mitigate these increases». Regarding inflation, he stresses that “policies have medium-term effects, so even if they slow down now, rate increases already approved will yield results.”
Finally, Francisco Menargues, president of the Alicante College of Economists, also coincides with the need to stop increases to avoid contagion. It doesn’t look like a financial crisis like we had in 2008 will happen, but precautions need to be taken.
Industry
If the European Central Bank responded to the concerns of the markets and decided to limit the price hikes, this news would have been well received by the Alicante sector, which is already experiencing the consequences of high interest rates. Luis Rodríguez, president of the State Federation of Metal Entrepreneurs (Fempa), points out that the rise in the price of money has consequences for companies. «On the one hand, there is a decrease in profitability, on the other investment brake, such that some are already delaying decision making» warns.
Also, Marián Cano, president of the Valencian Footwear Entrepreneurs Association (Avecal), stressed that the increase in rates coincided with the repayment of ICO loans, saying that “there is a bottleneck and we are worried”. about some companies.” Pepe Serna, president of the Valencia Community Textile Entrepreneurs Association (Ateval), agrees, noting that “the money is now more expensive to get and this paralyzes projects”.
24,000 million losses in the Spanish stock market
Uncertainty hit the markets again. After a one-day ceasefire on Tuesday, the announced Credit Suisse crisis, adding to the crisis caused by Silicon Valley Bank, created a perfect storm in the markets that wiped out nearly 24,000 million in just four stock trading sessions. Capitalization of Spanish banks by Ibex. In Wednesday’s session, Sabadell fell more than 10.49%, BBVA fell 9.60%, Bankinter 6.46%, Santander 6.89%, CaixaBank 6.72% and Unicaja 6.06%. Other European assets are also affected by the earthquake caused by the Swiss establishment. For example, French BNP Paribas lost 9.2%, Dutch ING 8.5% or Société Général 10.62%, Deutsche Bank 8.2% and Italian Unicredit 8.52%. Wall Street was also dragged into this downward spiral at the open and fell as low as 1.8% at the beginning of the session, with the S&P 500 falling as low as 1.62% and the Nasdaq as low as 1.07%.