The current banking crisis is a "global phenomenon" that beg

The crisis in the banking sector was seen coming long before the bankruptcy of Silicon Valley Bank (SVB) at the beginning of the month, according to Kenneth Rogoff, former chief economist of the International Monetary Fund (IMF). Rogoff, a leading expert on financial crises , says the chaos ensued after several years of ultra-low interest rates . In the case of SVB, the bank had a substantial proportion of deposits invested in securities that it had initially planned to hold to maturity, along with a large number of uninsured deposits . But when rates rose , the value of bonds fell. And when SVB was forced to sell those bonds at huge losses before maturity, clients panicked about the safety of their deposits and withdrew the funds en masse, causing a classic banking stampede. "What happened was that Silicon Valley Bank was perhaps a little extreme in its naivety.



But almost any type of investment strategy that had illiquid assets—longer-term assets—was going to lose money this way ," explains Rogoff, a professor of economics from Harvard University, to Yahoo Finance Live . "I didn't know it [would start] in the American banking Asia Phone Number List sector," he adds, because it might have come more from Japan or Italy before SVB was taken over by regulators. " It's a global phenomenon ." From the global financial crisis more than a decade ago until last year, banks have been managing risk and investing under loose monetary policy, which was "a good money-making machine for a long time," Rogoff adds. Now that the Federal Reserve and other central banks are raising rates, entities have to adapt to drastically different economic conditions in order to serve their customers, he says.







Many clients had told us that they would have to close or cover their payrolls through loans with personal guarantee. Customers were expected to be furious, because their money and operations were blocked. It is their livelihood. However, I have not had a single frustrated or angry call with a client. Every call I have received has been full of empathy and support. There has been calm. And that makes you feel even worse, because if someone is mad at you and being a jerk, you might think, "It doesn't matter, I can't do much." But everyone was so empathetic, so I was like "I really want to help you, but I don't know what I can do." My team has called, emailed, and texted hundreds of customers. They haven't been complaints so much as questions. The key to SVB has always been the people. Now I'm hearing from former clients who rushed to open accounts at Wells Fargo, Chase or JP Morgan saying that the beginning was great in opening the accounts.