Ray Dalio, the recently retired founder of Bridgewater, said on his LinkedIn page that SVB’s failure was part of the “very classic bubble-bursting part of the short-term debt cycle”, adding: “This bank failure is a ‘canary in the coalmine’ early-sign dynamic that will have knock-on effects in the venture world and well beyond it.” It is not even clear what their various unrealized losses on securities and other assets are.- Nouriel Roubini March 15, 2023ĭespite government interventions to secure depositors of SVB and New York-based Signature, leading Wall Street figures warned that crises affecting regional or mid-size US banks may not be at an end, with further regulatory and market repercussions. “Too big to fail and too big to be saved”.
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The high-profile economist Nouriel Roubini told Bloomberg news that if Credit Suisse were to collapse it could result in a “Lehman moment” – a reference to the collapse of the US investment bank Lehman Brothers in August 2007 at the start of the global financial crisis.Īs I pointed out in my Bloomberg TV interview this morning the Credit Suisse crisis is a “Lehman moment” for European and global markets.
However, other leading financial figures warned that the instability brewing in the European banking sector could pose an even bigger threat to global market stability. “The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks. “It’s too early to know how widespread the damage is,” Fink wrote. “Something else had to give as the fastest pace of rate hikes since the 1980s exposed cracks in the financial system,” he said.įink added it was not yet clear where new victims of the “asset-liability mismatches” that claimed SVB would be found. Such concerns were further fuelled on Wednesday when shares in Credit Suisse plunged to record lows after the troubled Swiss lender’s biggest investor ruled out providing it with more funding.įink described the situation as the “price of easy money” that was having to be paid after the Federal Reserve’s decision to start aggressively raising interest rates. “While sanctions evasion via crypto currencies is harder to detect in the first place, once detected it is very easy to investigate, because crypto transactions are fully traceable and it is practically impossible to alter that,” an EU official told Fortune.The failures over the past week of not only the California-based bank but also fellow US lenders Signature and Silvergate have prompted jitters across global markets. The EU Commission said on March 11 th it would make sure that the country and its ellites cannot use crypto assets to circumvent economic reprisals put in place. The war in Ukraine is the latest accelerant that can hasten the trend towards crypto.Ĭoncerns have arisen Russia, the eleventh largest in the world, might attempt a pivot to crypto after its access to the SWIFT global payment system was withdrawn as penalty for its invasion.
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Beijing itself wants to crack down on decentralized finance as it represents a threat to its one-party rule.
The Fed and the ECB, two largest monetary authorities in the western world have been reacting to pressure from China, where a digital yuan was piloted for foreigners during the recent Winter Olympics. Federal Reserve decision to publish earlier this year a study examining the implications of a digital dollar.įed chair Jay Powell has taken a conservative approach to these so-called central bank digital currencies, or CBDCs, due to the oversized importance of the greenback as the world’s reserve currency.īy comparison the European Central Bank launched its own two-year pilot last July, with sources in its Frankfurt headquarters telling Fortune at the time it was acting at the behest of numerous finance ministers from eurozone governments. “A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption,” Fink countered, arguing digital currencies can also help bring down costs of cross-border payments. This is one reason they have been a vehicle for concealing the origin of illegally gotten gains.
The conflict has become a catalyst prompting governments around the world to re-evaluate their currency dependencies in view of the crippling sanctions imposed by western allies on Russia, sanctions that only have teeth due to linkages in the global financial system.īy comparison, crypto-and decentralized finance more broadly-are designed with the purpose of circumventing traditional gatekeepers like governments and centrall banks that impinge on financial freedom.
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