Within a week two American banks have collapsed. This is quite intriguing that amidst, senior Economists claiming Indian systems touching rock bottom; India stands tall. While, the superpower’s powers are seemingly fading away. And this is called as the third biggest financial crisis in USA. The Silicon Valley Bank and Signature Bank are now seized by the Federal Deposit Insurance Corporation (FDIC) and the depositors are screaming.
This was actually not unprecedented neither a sham. Rather, this complete situation of Bank collapse is a substantial call to the upcoming havoc in USA. The going on Russia-Ukraine war and America’s losing grip on its industrial strength has landed up the country in this trough.
What Is The Issue?
Signature Bank is a New-York based bank which had 40 branches and in all assets of $110.36 billion with deposits of $88.59 billion. As the Silicon Valley Bank collapsed and got seized by the government, panicked depositors of SB withdrew from there also. This situation was taken as a matter of concern by the government authorities and the bank was taken over. Hence, to keep the customers’ money safe, the US authorities are taking measures.
While, Silicon Valley Bank (SVB) which is the 16th largest bank of USA in which most of the investment was not insured. And as the interest rates of the bank rose, the depositors got panicked. And thus, started to withdraw money on a large scale.
On an interesting angle, many Republicans in America are adamant that this failure is due to wokeness! Yeah, diversity and inclusivity based welcome note adopted by SVB is called as the prime reason for its downfall. To what an extent is this true, the intrusion of woke culture in American institution is a grave matter. So, the chances of it being one of the reasons cannot be simply denied.
Upon this falure in USA, Switzerland’s Credit Suisse is all falling into the trap. But, as the Switzerland’s Central Bank’s emergency funding has reached; Credit Suisse shares rose as on 16th March.
Sorry Liberals! Didn't feed you Burnol Moment today! Here it is!
Cheerleader of #Hindenburg Fake Research… #CreditSuisse is ROYALLY SCREWED!!#CreditSuisse 's biggest backer, Saudi National Bank, has REFUSED TO PROVIDE FURTHER FINANCIAL HELP to it.
Result: It's Shares have… https://t.co/IMbgVnmISV
— BhikuMhatre (@MumbaichaDon) March 15, 2023
Crypto Angle to The Failure
Among the top causes, crypto currency is one of the reasons of the failure of SVB and Signature Bank. Signature Bank which was established in the year 2001, began to trade in crypto since 2018. The bank created an all-day payment service channel for crypto users. Hence, it had escalated their deposit reserves to $16.5 billion from the customers using crypto.
While crypto is a very much sought for thing in this decade. But, the governments all across the world are not going to simply get away with private crypto without any regulation. And as one can see, Government of India, has put a strong regulation o crypto money, there are high chances many other countries are planning to do so. While, SVB and Signature Banks were already into that, Federal Bank did not intend to take it forward for long as this is vague sector. And hence, rise in private crypto can shun the authority of Central Banks of the countries.
Bail Out Packages To Big E-Commerce
Currently, the speed and expanse of the E-Commerce portals was unprecedented. These were majorly a concern for the local markets and the MSMEs (Medium, Small and Micro Enterprises). The overarching capacity of the E-Commerce has badly affected the local market and made the informal sector dependent on a global cycle. Although, it has brought consumerism to its heights it became a major reason for this fall-out.
Banks like SVB and Signature Bank gave away large bail-out packages to these e-market portals.
De-Dollarisation In The Making
Economic expert Ankit Shah had been predicting this situation since long time. And as the expert says, that this is just a trailer in the process of ‘Global Reset’, much more has yet to arrive!
Henceforth, the process of de-dollarisation is on its way. The term which denotes, that the global supply chin and market authority is going to shift from America based economy to another axis.
Conclusion
Amidst all this game we can see the working of many factions and stakeholders. This is not just an economic issue, but a matter of geo-politics which is going to unfold in the upcoming months. India is going to be a major player in this upcoming event as we are economically growing. Hence, Indian Banks which are currently going stronger and showing vitality. There can be attacks on them, as can be seen in Adani- Hindenburg case. Therefore, the times ahead are crazily unfathomable, yet fathomable if seen keenly.
References-
- https://www.cnbc.com/2023/03/13/signature-bank-third-biggest-bank-failure-in-us-history.html
- https://www.usatoday.com/story/money/economy/2023/03/13/silicon-valley-bank-collapse-live-updates/11464387002/