In a joint statement, the US Treasury Department and the Federal Reserve (FED) announced a series of measures to stabilize the banking system and said that SVB depositors would have access to their deposits on March 13 (local time).
The move comes as authorities take over New York-based Signature Bank, the second bank to collapse in just days.
Analysts note that it is important that the Fed will accept collateral at par rather than market pricing, allowing banks to borrow without having to sell assets at a loss.
The US Treasury Department and the Federal Reserve (FED) have announced a series of measures to stabilize the banking system. Photo: Reuters
“These are bold moves,” said Paul Ashworth, head of North America economics at Capital Economics. “In practice, this should be enough to prevent any spillover effects and prevent further bank failures, which could happen in the blink of an eye in the digital age. However, spillover effects are often more about fear of panic, so we stress that there is no guarantee that this will work.”
Meanwhile, the International Monetary Fund (IMF) said it was "closely monitoring" developments and potential financial risks from SVB's collapse.
Responding positively to the move by US authorities, US S&P 500 futures increased 1.2%, while Nasdaq futures increased 1.3% in the morning trading session on March 13.
However, Asia -Pacific stock markets fell in morning trading on March 13 (local time). The MSCI Asia -Pacific Index (excluding Japan) fluctuated as investors weighed the consequences of the SVB bank collapse on regional markets.
Meanwhile, Japan's Nikkei index fell 1.1%, while South Korea's Kospi fell 0.75% in morning trading on March 13 (local time). Investors predict that the EFD will now hesitate to raise interest rates by another 0.5% this month.
According to Reuters, Mr. John Briggs, head of global economics at NatWest Markets (UK), said that accelerating the rate of interest rate hikes in the face of a serious banking collapse may not be the wisest decision for the FED.
Meanwhile, the European Central Bank will meet on March 16 and is expected to raise interest rates by 0.5%. In response to the collapse of the US bank, the price of gold rose 0.6% to $ 1,879 / ounce on March 13 after increasing 2% in the trading session last weekend.
Oil prices also saw gains as Brent crude rose to $82.88 a barrel while US crude rose to $76.94 a barrel.
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