ING economists assess the consequences of the fall of Silicon Valley Bank. So far the system seems fine, but you have to treat it with caution, just in case..
The system is under scrutiny, but so far it’s going well
“We have to accept that some banks will come under pressure at this stage of the interest rate cycle. The Fed has gone from zero to close to 5%. In addition, starting from zero rates implies a greater sensitivity of rates to increases (think of the duration).”
“If some balance sheets are eroded by lower market valuations and become a monster, before we know it, there will be trust issues to deal with. Big banks are less affected; For starters, they have to overcome more difficult obstacles. But the small banking sector could be further strained“.
“All of this could and, in fact, probably should happen. But we also have to allow a little bit of time before we can be sure.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
