Credit Suisse crisis raises new fears for financial system

Less than a week after the bankruptcy of two North American banks in Silicon Valley, a new crisis imposed itself on the financial system.

Last Wednesday (16), Credit Suisse saw its shares plummet by more than 25% after its main shareholder, the Saudi National Bank (SNB), said it would not give new financial aid to the Swiss bank. The news shook stock markets around the world — including Brazil — and investor confidence in the banking system dissolved into uncertainty.

Thursday, however, dawned with a hint of calm: the Central Bank of Switzerland announced a loan of US$ 54 billion to inject liquidity into the bank, which is suffering an unprecedented shake of confidence in its more than 150 years of history.

As a big crisis does not come alone, it is possible that the collapse of Credit Suisse was its own fault, but it happens at a time of fragility in the rich world and in the midst of the greatest global tightening of interest rates in recent decades. The turmoil even puts the monetary policies of Europe and the United States on the agenda, even though they were not directly to blame for the situation of the Swiss bank.

The European Central Bank (ECB), incidentally, should announce the decision on the interest rate for the euro zone this morning. It is not known, however, how the Credit Suisse crisis may affect President Christine Lagarde’s plan to maintain the pace of 0.5 pp of growth.

The end of the era of cheap money places the financial system and credit in a vulnerable situation. The Swiss BC’s loan may ease the market’s losses, but it is far from pacifying the fear of a breakdown in the international financial system.

In this Thursday’s episode, CNN Money reflects on the repercussions of the case even in Brazil, where the market divides attention between the international scenario and the expectation for the fiscal package that is being managed by the government.

Presented by Thais Heredia, the CNN Money it presents a balance of the news subjects that influence markets, finances and the direction of society and the dynamics of power in Brazil and in the world.

*Posted by Tamara Nassif