Recent episodes of banking panic have the cryptocurrency sector on alert: 3 experts explain the possible consequences

That’s how Jason Brett, regulator of the Federal Deposit Insurance Corporation (FDIC) during the housing crisis, says he feels about recent bank failures. In the last 2 weeks there has been a domino effect, causing one regional bank to fail after another. It started with Silicon Valley Bank and, although for other reasons, it has reached Europe with the have. The have the cryptocurrency cryptocurrency purchase of Credit Suisse by UBS. Why UBS’s deal with Credit Suisse threatens its dominance over wealthy clients UBS and Credit Suisse. Silvergate Bank, which defined itself as a leading financial technology and cryptocurrency bank, was the one that truly started this trend after closing on March 8 due to a liquidity crisis. Shortly after, Silicon Valley Bank (SVB) faced a massive flight of deposits after some of its investments collapsed . Eventually, California state regulators shut it down. 2 days.

This system consists of the bank having only a fraction

The FDIC’s quick response to support depositors surprised Brett. But it seemed even more surprising that the closure of a bank occurred on a Sunday, as happened have the cryptocurrency with Signature Bank . He states that it is usually on Fridays. “These are really extreme measures. I don’t know what they know, but if there is any significant risk in the banking system, it could  seriously Find Your Mobile Number List harm our economy for years to come,” he says. At the center of this entire debacle is the issue of fractional reserves.  of the deposits in liquidity, being able to invest the rest in other assets. What is questioned and is very important for cryptocurrencies is whether this system used by many banks also works for technological investors in volatile growth sectors. Ultimately, the question is whether this is the best system for a volatile.

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It is a good question to ask again in light of the 3 US bank failures according to Todd Baker, senior researcher at. The Richman Center for Business, . Some experts Business Insider spoke to maintain that the answer is no: the current system is not perfectly have. The cryptocurrency suited to cryptocurrencies , and there is currently no suitable replacement in sight. The have the cryptocurrency era of digital banking panics One thing that has become clear in recent weeks is that banking crises are different these days, especially for smaller banks serving specialized sectors. “Massive withdrawals are becoming a different and much more dangerous phenomenon because they happen more quickly. People’s increasing digital and social media connections actually fuel them,” Baker says. The expert remembers massive deposit leaks as a slower process.

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