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Research Indicates That 186 Banks Are At Risk of Collapse

On March 22, 2023, the Federal Reserve hiked interest rates for the ninth time, this moment by twenty-five points. The federal interest rate now ranges between 4.75% and 5%.

After the financial instability brought on by the failures of Silvergate Capital, Silicon Valley Bank, Signature Bank, and Credit Suisse, this action, though, sent confusing messages to investors. Investors believe that one of the critical causes of these recent falls is the ongoing rate increases.

According to a new report by Social Science Network, if a bank run—defined as the rapid withdrawal of funds from just one bank, occurs again, about 186 banks may collapse similarly to SVB, and the FDIC might be unable to cover guaranteed deposits.

Also, due to the rising concern, some people are calling for the central bank to hold onto raising interest rates while considering the effects of SVB and Signature bank. Fed Chair Jerome Powell had warned Fed watchers as the US central bank was prepared to boost the process of raising interest rates weeks even before an increase and the meltdown.

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