The regional bank’s failure in the United States has shaken the global markets. Investors feared that the backlash would weigh on other sectors and markets. The U.S. central bank tried to reassure customers that they would get their deposits and that Silicon Valley Bank’s unexpected collapse wouldn’t have lasting effects. Despite that, people worried, and markets were in turmoil over the last few days.
Asian regulators and policymakers also attempted to control volatility caused by SVB’s failure. On Thursday, they spoke about their banking systems’ resilience. Moreover, officials underlined that there was little risk of the same thing occurring in Asia. They tried to play down the risks to avoid sell-off triggered by negative sentiment in the global banking sector.
On Wednesday, Credit Suisse’s shares plunged low, adding to the turmoil. Investors worried that it might trigger a deeper and broader banking crisis. However, the bank announced that the Swiss central bank would lend it approximately 50 billion Swiss francs ($54 billion) to mitigate the damage. These funds will help Credit Suisse to recover instead of sinking further.
What do the experts say?
On Thursday, Australian Treasurer Jim Chalmers noted that investors had no reason for worry. According to him, local banks are well-capitalized. Chalmers also mentioned a meeting between the central bank and major regulators due this week. The officials will likely discuss the SVB’s collapse, among other things.
According to the Australian Treasurer, the country’s regulators remain on top of things, while Australian banks are well-capitalized and maintain strong liquidity positions. Still, some risks remain, especially given the fast-paced monetary tightening, so many countries embarked on.
Meanwhile, the Hong Kong Monetary Authority announced that it had also been watching closely developments in overseas markets. The city’s de facto central bank said it would continue discussing current developments with relevant overseas officials.
