{"id":237788,"date":"2023-04-13T20:21:05","date_gmt":"2023-04-13T14:51:05","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=237788"},"modified":"2023-04-17T16:35:01","modified_gmt":"2023-04-17T11:05:01","slug":"we-need-proactive-regulation-to-fend-off-svb-like-bank-failures","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/we-need-proactive-regulation-to-fend-off-svb-like-bank-failures\/","title":{"rendered":"We need proactive regulation to fend off SVB-like bank failures"},"content":{"rendered":"\n<p><strong>Source<\/strong>: The post is based on the article\u00a0<strong>\u201cWe need proactive regulation to fend off SVB-like bank failures<\/strong>\u201d published in <strong>Live<\/strong> <strong>Mint <\/strong>on\u00a0<strong>13<sup>th<\/sup> April 2023<\/strong>.<\/p>\n<p><strong>Syllabus: GS 3 \u2013\u00a0Economy \u2013 Money and Banking<\/strong><\/p>\n<p><strong>Relevance: <\/strong><strong>measures needed to prevent bank crisis.<\/strong><\/p>\n<p><strong>News<\/strong>: The article discusses the Silicon Valley Bank (SVB) crisis and provides measures to prevent such a crisis.<\/p>\n<h2><strong>About Silicon Valley Bank (SVB) crisis<\/strong><\/h2>\n<p><a href=\"https:\/\/forumias.com\/blog\/silicon-valley-bank-crisis-reasons-and-impacts\/\"><strong>Click Here to Read<\/strong><\/a><\/p>\n<h2><strong>What were the steps taken by the US to minimize the impact of the crisis?<\/strong><\/h2>\n<p>To calm down the financial markets, the US Treasury Secretary announced <strong>special protection even for uninsured deposits held with failed banks<\/strong>.<\/p>\n<p>It is estimated to cost the US Federal Deposit Insurance Corp (FIDC) over $20 billion.<\/p>\n<p>The US Federal Reserve also <strong>opened up a special liquidity window<\/strong>, in the midst of its policy tightening to control inflation, against the face value of securities.<\/p>\n<h2><strong>What were the scenarios at the time of the SVB crisis?<\/strong><\/h2>\n<p>The <strong>gap in the value of assets and liabilities of US commercial banks<\/strong> stood at $2,137 billion. <strong>Mark-to-market losses were<\/strong> over $2 trillion which was more than 40% of the capital of all banks.<\/p>\n<p><strong>More than 50% of SVB\u2019s long-dated securities had fewer financial values<\/strong>, with facing mark-to-market losses. <strong>Its capital ratios were unfavourable<\/strong> and its customer profile skewed in favour of bulk deposits.<\/p>\n<h2><strong>What can be done to prevent a bank crisis?<\/strong><\/h2>\n<p>It is necessary to come up with<strong> laws that bridge gaps and provide real-time necessary information on fresh developments<\/strong>, including the use of technology for financial transactions and the behaviour of participants.<\/p>\n<p>There is also a need to <strong>constantly scan big data using machine learning and artificial intelligence.\u00a0<\/strong><\/p>\n<p>It will help to model alternate scenarios and provide solutions for authorities to intervene in time to avert disasters and minimize large-scale mishappening.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: The post is based on the article\u00a0\u201cWe need proactive regulation to fend off SVB-like bank failures\u201d published in Live Mint on\u00a013th April 2023. Syllabus: GS 3 \u2013\u00a0Economy \u2013 Money and Banking Relevance: measures needed to prevent bank crisis. News: The article discusses the Silicon Valley Bank (SVB) crisis and provides measures to prevent such&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/we-need-proactive-regulation-to-fend-off-svb-like-bank-failures\/\">Continue reading <span class=\"screen-reader-text\">We need proactive regulation to fend off SVB-like bank failures<\/span><\/a><\/p>\n","protected":false},"author":10320,"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":[216,10501,11430],"class_list":["post-237788","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-live-mint","tag-silicon-valley-bank-crisis","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704914546},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/237788","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\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=237788"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/237788\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=237788"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=237788"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=237788"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}