Economist Joseph Stiglitz said this Wednesday that the collapse of Silicon Valley Bank (SVB) was a predictable financial event due to rapidly rising interest rates and a lack of regulation in the US.
Economics Nobel Laureate Joseph Stiglitz spoke at an online debate on the causes and policies of high inflation as part of the Organization for Co-operation and Development (OECD) economic forecasts to be released on Friday.
“Look what happened to the Silicon Valley bank? It was a kind of failure in our financial system that was predictable, predictable, and what would happen if we raised interest rates quickly,” he said.
SVB, which is based in Santa Clara, California and specializes in the technology sector, filed for bankruptcy last Friday.
Joseph Stiglitz stressed that the need to “normalize” interest rates was advocated despite fears that “rapid and excessive” rate hikes would have a major impact on the economic system, as interest rates have been low for extended periods in recent years.
The economist emphasized that the collapse of the institution in the United States was not due to problem loans: “It was the structure of interest rates that changed as a result of the type of actions that the US Federal Reserve System (FRS) is taking.”
The Fed “decided we didn’t need regulation,” then changed interest rates a lot” and there were no “stress tests,” he added.
US President Joe Biden has already assured that “Americans can rely on the reliability of the banking system.”
On Sunday, US authorities announced they would ensure the withdrawal of all deposits from the failed California bank and also allowed access to all deposits at another institution, Signature Bank, which was closed by the regulator.
In addition, the Fed has pledged to provide the necessary funds to other banks so that they can respond to withdrawals from their customers.
London, for its part, announced that the UK branch of SVB had been sold to British banking giant HSBC for a symbolic pound.
Author: Portuguese
Source: CM Jornal
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