Silicon Valley Bank, are we on the brink of another big banking crisis?

However, the story has not always had a happy ending, because according to a study by Bloomberg Economics, the effects of this problem on US regional banking and the actions of the Federal Reserve in its next policy meetings remain to be seen. monetary, especially since banking crises tend to lead to a decline in prices (disinflation).

Anna Wong, chief US economist at Bloomberg Economics, and Stuart Paul, economist at the same institution, admit that it is difficult to define a banking crisis, but that they are usually marked by two types of events:

1. Bank runs leading to the closure, merger or acquisition of one or more financial institutions

2. If there are no runs, the large-scale closure, merger, acquisition, or government assistance of a major financial institution marks the beginning of a series of similar outcomes for other financial institutions.

in his studio US Insight: What 140 years of banking crisis say about SVB and CPI, both specialists point out that the failures of Silicon Valley Bank and Signature Bank meet the first criteria, but that if only the second were applied, it would still not be considered a crisis, since it is too early to say if a series of closings, mergers and acquisitions: “although we think it is unlikely”.

In the last 14 decades, the US economy has faced 9 banking crises, which are:

1. The panic of 1873.

2. The panic of 1884.

3. The Baring Crisis of 1890.

4. The panic of 1893.

5. The bankers’ panic of 1907.

6. The great financial crisis of 1914.

7. The Wall Street Crash of 1929.

8. The savings and loan crisis of 1984.

9. The great financial crisis of 2007.

“Historically, banking crises lead to disinflation and slower growth. In the nine episodes identified in the database, inflation on average was 2 percentage points slower during the crisis years than in the non-crisis years”, say the specialists.