The US banking crisis may threaten the stability of international financial markets. Silicon Valley Bank could be the spearhead of a wave of bankruptcies and destabilization of both regional and international banks.
“In the capital market things tend to repeat themselves. The 2008 crisis began in 2005 with a very strong rate hike“, assured Juan Manuel Carnevale, an economist specializing in finance.
“The world began to have problems because people could not get their credits and today the situation is very similar, the first blows of the crisis were seen in 2007 and this did not end because the changes that were made in 2018 favor banks hide the losses they have with treasury bonds”, added the expert.
“Banks are losing net worth and we still don’t know what happened to the loans to companies and individuals,” said the economist. “The Fed acted well by putting its chest so that Silicon Valley Bank does not fall but interest rate hikes are not positive”, he added.
What is the role of US Treasury bonds
“Treasury bonds are the main cause of the economic loss of banks”, shot the expert. “The United States Treasury and the Ministry of Economy are selling their bonds at the same time, it is the first time in history that this has happened,” he added.
Finally, Carnevale said that inflation is rising above wages in the United States, which makes the variable interest rate rises strongly.
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