Economy

Global Concerns After the Collapse of an American Bank: What are the Implications?

Global Concerns After the Collapse of an American Bank: What are the Implications?

Concerns are growing among some executives and investors in the financial sector that the collapse of Silicon Valley Bank (SVB) could trigger a domino effect on other banks in the United States, unless regulators find a buyer early this week to protect uninsured deposits. Banking regulators in California closed the SVB Financial Group on Friday, March 10, taking control of customer deposits in the largest bank failure in the U.S. since 2008. This action came as the bank, a major lender in the technology sector, was desperately trying to raise funds to cover losses resulting from selling assets affected by rising interest rates. The issues it faced led to a rush of customers withdrawing their funds and raised concerns about the state of the banking sector. U.S. Treasury Secretary Janet Yellen confirmed on Sunday that she is working closely with banking regulators to address the collapse of Silicon Valley Bank and protect depositors, but she noted that "there is no major rescue plan under consideration." Furthermore, the Kuwaiti news agency KUNA quoted the central bank governor, Basil Al-Haroun, as saying that the impact of the U.S. bank's collapse on local banks is "extremely limited." In the Middle East, most stock markets closed lower, particularly the Egyptian stock exchange, following a decline in global stocks due to fears of contagion.

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