He European Central Bank (ECB) convened an extraordinary meeting of the Supervisory Board for this Friday to analyze the turbulence in the banking sector in USA.
“The council meets to exchange views and inform members about the latest developments in the banking sector,” the German media quoted its representative as saying.
Already at the beginning of the week, an extraordinary meeting was held due to turmoil in the banking sector.
In the US, a regional bankFirst Republic” got into a difficult situation due to the fact that its clients withdrew most of their deposits, which caused concern after the crash Silicon Valley Bank and Signature Bank.
Given this, eleven US banks, among which the four largest (Bank of America, Citigroup, JPMorgan Chase and Wells Fargo) announced total injection $30 billion in the First Republic to bolster its liquidity and avoid its collapse.
“Following the failures of Silicon Valley Bank and Signature Bank, there was an outflow of uninsured deposits in a small number of banks. The United States financial system is one of the best in the world, and the United States banks (large, medium and public) do an exceptional job of serving the banking needs of their customers and communities.
The injection of large US banks into the First Republic comes after the rating agencies S&P Global Ratings and Fitch They will downgrade the First Republic’s credit rating to junk bonds due to the outflow of deposits from the organization and even after US regulators promised to support the banking sector after the collapse of Silicon Valley Bank (SVB).
Upon learning that the big American banks were negotiating to save the First Republic, Wall Street yesterday managed to close in the “green”. He Dow Jonesits main indicator, rose 1.17%, while S&P 500 closed up 1.76%. For its part, First Republic shares rose nearly 10%.
There is a fear of contagion and a crisis of confidence that will lead to a run on deposits that could ruin other banks.
In European stock markets, banking securities have traded lower since the start of the turmoil.
Despite the critical situation, the ECB maintained its policy of raising interest rates on Thursday and raised them by half a point.
(According to Europa Press and EFE)
Source: Aristegui Noticias
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
