by Niels Saelens
published on To •
4 min read
published on To •
4 min read
The turmoil in the banking sector is mainly due to runs on banks as customers want to withdraw their money en masse. And several central banks are warning of the role social media plays in this regard.
Why is this important?
Banks do not have enough capital to return to all their customers the money that they would want to withdraw, if they all wanted to do so at the same time. They use this money to invest in bonds and grant loans, among other things. The American bank Silicon Valley Bank, for example, collapsed because it had to sell debt securities at a loss after a bank run.In the news : Michael Barr, vice chairman of the US Federal Reserve, told the Senate on Tuesday that Silicon Valley Bank customers wanted to withdraw some $100 billion the day regulators asked the financial institution to cease operations. The day before, they had also withdrawn $42 billion from the bank.
- According to Barr, social media played an important role in this impressive banking rout
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