The reason for this is that in terms of assets in the US, this is the biggest banking crisis since 2008. The combined assets of the 25 banks that failed in 2008 were $374 billion. This time the combined asset of Silicon Valley Bank and Signature Bank is $319 billion. A bank has reached the verge of collapse. First Republic Bank is also facing the threat of bankruptcy. Last year US banks lost $620 billion. The way the US Fed Reserve is raising interest rates to control inflation, many more banks are at risk of drowning.
what will happen if banks fail
Since 2001, 560 small and big banks have failed in America. Four banks failed in 2001, 10 in 2002, three each in 2003 and 2004. After this, three banks failed in 2007 and 25 in 2008. In 2008, Washington Mutual had sunk, whose assets were $ 307 billion. Apart from this, Indymac with an asset of $ 32 billion was also drowned. 140 banks failed in 2009, 157 in 2010, 92 in 2011, 51 in 2012 and 24 in 2013. After this, in 2014, 17 banks were submerged. Since then every year the number of banks that failed has been in single digit. But this time the collapse of Silicon Valley Bank and Signature Bank has stirred up depositors. People are withdrawing money from small banks and depositing it in big banks. Experts say that due to less deposits in banks, they will give less loans. This will stop the flow of capital in the economy and increase the risk of recession. Its effect can be seen on the whole world including India.
Source: navbharattimes.indiatimes.com
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