Friday, March 10, marked the beginning of a banking crisis that has since escalated, destroying billions of dollars in wealth and destabilizing multiple economies.
Key Details
- On March 10, the U.S. suffered one of its worst banking crises in decades with the destruction of Silicon Valley Bank, and setup up a chain reaction that has raised anxiety and stress across the global financial system.
- In the following two weeks, the 10 largest U.S. banks lost $275 billion in market capitalization, the Dow Jones fell 1,570 points, and banks borrowed $153 billion in bailouts from the Federal Reserve to avoid a liquidity crisis, Forbes reports.
- Individual banks suffered the worst, with Silicon Valley Bank, Silvergate Bank, and Signature Bank fully collapsing and the First Republic and Credit Suisse requiring bailouts to continue operating.
- First Republic stocks tanked 80% in two weeks, and Credit Suisse stock fell 99% from its 2007 peak valuation, Forbes notes.
Why It’s Important
The repercussions of the collapse of Silicon Valley Bank on March 10 continue to be felt across the globe, having ushered in one of the largest banking crises since the 2008 financial meltdown and nearly causing a cascade effect that could have destroyed hundreds of regional banks and harmed major financial institutions. JP Morgan, Bank of America, Wells Fargo, and Morgan Stanley are far from immune, having collectively lost $55 billion in market value on March 10.
The cumulative impact of multiple crises and bailouts has resulted in the most chaotic two weeks in decades for the financial industry, with hundreds of billions of dollars being lost, Forbes notes.
The federal response in the U.S. and Switzerland kept the implosion from worsening. Still, continued instability and central banks tightening the currency only threaten to cause more liquidity crises going forward. As JPMorgan analyst Eric Bernstein writes, it’s possible “another mole will arise to renew the financial sector stress.”
Alternatively, Bitcoin has raised in value by 28.9% since March 10 and is currently valued at more than $28,100—helping demonstrate the token’s alleged resilience against overall market trends.
