And while the government has stepped in to stabilize the situation, taxpayers probably won't be on the hook for large sums of money,' Nobel Prize-winning economist Paul Krugman wrote in a New York Times column. We probably aren't looking at a systemic financial crisis. While those regulations didn't cover SVB – in part due to a law passed by the Trump administration – they still apply to the 12 largest US banks. This includes increased capital requirements, which ensure banks have sufficient reserve levels in times of crisis.

Today, the US has more stringent banking regulations meant to protect the industry should it face more turmoil. Stock market volatility surged while bond yields plunged on expectations the Federal Reserve will halt its interest-rate increases in view of the risk to financial stability.Īs ripple effects from SVB's collapse spread across the world of finance, investors are frantically searching for answers to what it all means for the key pillars of the economy - from the stock market to the banking sector and the Federal Reserve's interest-rate policy. SVB's meltdown was quickly followed by the implosion of New York-based Signature Bank and a crash in the share prices of regional US lenders including First Republic and Western Alliance. That capped a turbulent week that saw a botched fundraising attempt by Silicon Valley Bank (SVB) and a $1.8 billion loss on its bond holdings, which ultimately triggered an old-fashioned bank run.

The go-to lender for startups was shut down Friday by regulators and put under the control of the Financial Deposit Insurance Corporation, marking the biggest bank failure since 2008.

The stunning collapse of Silicon Valley Bank has sent shock waves across the whole US financial system.

Linkedin logo link