The US Treasury chief on Wednesday stated that the failure of a small financial institution can set off the demise of different smaller banks.
“The failure of a small bank, like a community bank, can likewise trigger a run on other banks, and failure of that bank could lead to a systemic failure,” Janet Yellen stated earlier than the Financial Services and General Government Subcommittee on the US Senate.
Yellen’s feedback got here within the aftermath of the sudden demise of Silvergate Bank, Silicon Valley Bank (SVB), Signature Bank and First Republic Bank, which have all gone below inside a matter of weeks.
“SVB has experienced a calamitous run, a run that was so enormous that it overwhelmed the liquidity of this bank, and it created the potential for the fear for the safety about uninsured depositors in many other banks,” she stated earlier than the lawmakers. “It risked contagion throughout the banking system.”
“Our top priority is to protect the health of the US economy,” Yellen added.
Source: www.anews.com.tr
