Too early for financial crisis 2.0

Vor more than 15 years burst into the USA the real estate bubble. As a result, the global financial system began to falter. It took billions of taxpayers’ money to save banks and regain stability – also in this country.

The collapse of the Silicon Valley Bank (SVB) brings back memories of that time. Unsurprisingly, after the financial difficulties became known, bank stocks worldwide plummeted – the earthquake also reached Germany. Is a bank from the hip Silicon Valley of the USA the starting point of a new financial crisis? As things stand at present, the answer is no.

Sure, the SVB primarily financed young growth companies and also used digital crypto assets for their business model. The innovation and disruption skeptics will feel confirmed in their opinion that such a mix inevitably leads to a collapse must lead. But with their distrust of everything new, they are on the wrong track.

The collapse of the SVB goes back to a fundamental misjudgment on the part of the management. The idea was compelling: deposits were put into long-dated bonds, which seemed attractive in times of low interest rates. The deal didn’t work out, because with the quick succession of interest rate increases, this bet had to be lost. The market value of the bonds fell. The bank had a liquidity problem, investors withdrew their deposits in a panic, which exacerbated the crisis – a textbook “bank run”.

Would it be wise to dismiss management failure as an isolated phenomenon? Again, the answer is no. It will soon become clear which bank has similar explosive interest rates on its books. The answer to the question of whether the financial crisis The resulting regulation, which has often been criticized for being too harsh, was really strict enough will point the way to whether a financial crisis 2.0 is imminent.