{"id":232209,"date":"2023-03-18T21:37:30","date_gmt":"2023-03-18T16:07:30","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=232209"},"modified":"2023-03-18T21:37:30","modified_gmt":"2023-03-18T16:07:30","slug":"worlds-fed-up-us-central-bank-is-caught-napping-again","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/worlds-fed-up-us-central-bank-is-caught-napping-again\/","title":{"rendered":"World\u2019s Fed Up US &#8211; central bank is caught napping, again"},"content":{"rendered":"\n<p><strong>S<\/strong><strong>ource<\/strong>: The post is based on the article\u00a0<strong>\u201cWorld\u2019s Fed Up US &#8211; central bank is caught napping, again\u201d <\/strong>published in\u00a0<strong>The Times of India\u00a0<\/strong>on\u00a0<strong>18th March 2023<\/strong>.<\/p>\n<p><strong>Syllabus<\/strong>: GS \u2013 3: Effects of liberalization on the economy.<\/p>\n<p><strong>Relevance<\/strong>: About US Fed policy and bank failures.<\/p>\n<p><strong>News<\/strong>: Recently the focus of financial markets has shifted from central banks increasing interest rates to commercial banks collapsing. Three US banks have collapsed and a fourth has received an injection of $30 billion from a consortium of banks. In Europe, Credit Suisse had to borrow $54 billion from the Swiss central bank.<\/p>\n<h2>About the US Fed policy post-2008<\/h2>\n<p>Following the 2008 global financial crisis, the US Fed unleashed waves of liquidity through a process known as quantitative easing (QE) to deal with the crisis of its own financial intermediaries. Fed&#8217;s quantitative easing (QE) had spillover effects on emerging markets like India. For example, the \u2018<strong><a href=\"https:\/\/forumias.com\/blog\/brics-2021-vs-2013-about-taper-tantrum-and-economy-of-brics-nations\/\">taper tantrum<\/a><\/strong>\u2019 of 2013 caused outflow of capital and Forex depletion.<\/p>\n<p>Post-Covid, US Fed unleashed a <strong>loose monetary policy<\/strong>, then reversed course. The Fed embarked on a most aggressive policy of interest rate hikes. This led to predictable financial instability.<\/p>\n<h2>How US Fed policy has led to bank failures at present?<\/h2>\n<p>The Fed\u2019s supervisory regime didn\u2019t have a plan for banks likely to struggle in the wake of a fast-paced monetary tightening. So, that financial instability has spilt over to both the real economy and other countries.<\/p>\n<table style=\"border-collapse: collapse; width: 100%;\">\n<tbody>\n<tr>\n<td style=\"width: 100%;\"><strong>Read more: <\/strong><a style=\"font-family: inherit; font-size: inherit; background-color: var(--global--color-background);\" title=\"Silicon Valley Bank crisis: Reasons and Impacts\u202f- Explained, pointwise\" href=\"https:\/\/forumias.com\/blog\/silicon-valley-bank-crisis-reasons-and-impacts\/\"><strong>Silicon Valley Bank crisis: Reasons and Impacts\u202f- Explained, pointwise<\/strong><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>To avoid such failures in future, the US Fed needs to get its supervisory act together.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: The post is based on the article\u00a0\u201cWorld\u2019s Fed Up US &#8211; central bank is caught napping, again\u201d published in\u00a0The Times of India\u00a0on\u00a018th March 2023. Syllabus: GS \u2013 3: Effects of liberalization on the economy. Relevance: About US Fed policy and bank failures. News: Recently the focus of financial markets has shifted from central banks&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/worlds-fed-up-us-central-bank-is-caught-napping-again\/\">Continue reading <span class=\"screen-reader-text\">World\u2019s Fed Up US &#8211; central bank is caught napping, again<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10496],"class_list":["post-232209","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-times-of-india","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704908431},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/232209","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=232209"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/232209\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=232209"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=232209"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=232209"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}