This situation is due to the increase in bank interest, which puts small and medium banks at risk
There are nearly 200 banks in the United States at risk of collapse, such as Silicon Valley Bank (SVB), this is what a new American study warns of.
This week has been particularly difficult for the financial market – and banks in particular. After the collapse of the American Advanced Technology Bank and the Swiss Credit Suisse Bank lost its stability, to bring together the shares of banks around the world, and now it turns out that about 200 American banks may collapse in the event of a collective withdrawal of funds.
In the review published today by the Psagot Investment House, they estimate that the US Federal Reserve has “only one or two interest rate hikes in a barrel,” ahead of the expected interest rate decision on Wednesday. According to the investment house’s assessment, the Fed will not hesitate to raise interest rates (which reduces the stability of banks), because at the same time money will flow into banks, in order to increase their liquidity. “The Federal Reserve is determined to fight inflation and will be able to continue to do so by injecting liquidity into the system,” they wrote in Psagot. banker at the same time as it raises interest rates.” According to estimates, the Federal Reserve will raise interest rates by a quarter of a percent.
US banks are calling for a stabilization plan
Since the collapse of the Silicon Valley bank, American customers are abandoning small and medium-sized banks, in favor of large banks that are not considered at risk of collapse. Admittedly, the move in and of itself destabilizes those banks – and could lead to their collapse.
The study, which was published in the scientific journal “Social Sense Research Network” (SSRN), examined the financial stability of American banks. In the framework of the research, it was found that many banks whose assets were negatively affected by the increase in the interest of the Federal Reserve Bank, as happened with SVB Bank. In short, the market value of various banks In the United States $ 2 trillion less than what is written in the official financial statements of banks.
So, researchers from Columbia, Stanford and Northwestern universities concluded that 186 banks are at risk of collapse if half of their customers ask to withdraw their deposits. The researchers explained that in such a situation, the US authorities would not have the necessary amount to bail out the banks. Therefore, preventive measures are needed to stabilize the banking system already now. At the end of the week, a group of medium-sized banks in the United States asked regulators to extend insurance on all deposits for the next two years, in order to prevent deposit flight.
