The American “Bloomberg” website indicates that savers in banks that recently collapsed are looking for alternatives in order to keep their surplus money and obtain a better interest rate, and confirms that the transformation brought about by the collapse of those banks poses risks to the American financial system.
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Fed data: Deposits with these banks fell by $120 billion in the week ending March 15th
take up sitebloombergAl-Amri addressed the repercussions of the recent collapse of American banks, pointing out that American banks today find themselves in an impossible situation to overcome, after the financial crisis of 2008.
The site indicated that the collapse of US banks led to putting savers on high alert to obtain better and safer alternatives, pointing out that this raised rates enough to compete with money market funds, and that it was unsuccessful that would crush profit margins and potentially disturb prices. Stock.
The American site added that this collapse forced a rethinking of the traditional role of lenders in the American financial system and economy, and whether there were too many of them, noting that it also highlighted that there are other places where people and companies can keep their surplus money and get a better interest rate.
Over the past three weeks, he said, what was a slow journey from low-yield savings accounts has become a sprint to higher-yielding alternatives, and smaller banks feel the pain more acutely than their giant counterparts.
According to “Bloomberg”, Federal Reserve data showed that deposits with these banks declined by $120 billion in the week ending March 15, while deposits of the 25 largest companies increased by about $67 billion.
Outflows from US lenders continued on a larger scale the following week, with withdrawals of $125.7 billion.
The site revealed that for more than a decade, banks have been able to pay very low rates to depositors. And when the Fed cut interest rates in the financial crisis, it ushered in the era of low interest rates that allowed banks to borrow cheaply and earn handsome profits from lending.
Now, things have changed. The Fed has raised its borrowing standard at a rapid pace over the past year in an effort to curb inflation, but banks have been slow to increase the rates they offer customers, worried about what that will mean on their margins, he says.
On the tenth of this month, the US authorities announced the closure of the Silicon Valley Bank, which is close to the technology community, and which suddenly found itself in a state of severe insolvency, and entrusted the management of its deposits to the US Federal Deposit Insurance Corporation (FDIC).
Some financial executives and investors have grown increasingly concerned that the collapse of Silicon Valley Bank (SVB) could have a domino effect on other banks in the United States unless regulators find a buyer this weekend to protect uninsured deposits.