The U.S. banking industry will be able to contain the risk of further disruptions at startup lender Silicon Valley Bank (SVB) and the stress it will put on the system, said Mohamed El-Erian.
El-Erian, a Bloomberg Opinion columnist and chairman of Gramercy Funds, said Wednesday that “with prudent balance sheet management and avoiding further policy mistakes, contagion risks and systemic threats can be easily contained. ” he tweeted.
But he said the U.S. banking system was “strong overall, but that doesn’t mean all banks are.” “The long history of policies that have enabled leverage has led to volatility in yields, and the most vulnerable banks are now more exposed to both interest rate and credit risk.” expressed his opinion.
El-Erian has been critical of Federal Reserve Chairman Jerome Powell, saying the chairman’s comments following the Federal Open Market Committee (FOMC) have greatly increased market volatility. This might threaten economic health and financial stability, he argues.
news-rsf-original-reference">Original title:El-Erian Says US Banking System Can Weather SVB Contagion Risk(excerpt)