Banking stress puts U.S., European eyes on credit crunch

By inew

March 26, 2023

0

47 views

SBNY

0.%

Add to/Remove from Watchlist

Howard Schneider and Tom Sims

WASHINGTON/FRANKFURT (Reuters) – Stress in the banking sector is being closely watched for its potential to trigger a credit crunch, one A Fed policymaker said on Sunday, and an European Central Bank official also said tightening lending was likely. Authorities around the world are on high alert f the impact of the recent turmoil in banks in the United States at Silicon Valley Bank (SVB) and After closing down50 Signature library

(Nasdaq: 50 New York Stock Exchange) and the rescue takeover of Credit Suisse a week ago.

last week ended with a flash of financial market stress indicators. The euro fell against the dollar and euro zone government bond yields fell as the cost of insuring banks against default surged despite assurances from policymakers. In a recent effort to calm investors, the U.S. Treasury Department said on Friday that the Financial Stability Oversight Board agreed that the U.S. banking system “Robust and resilient”. “What is not clear to us is how much of these bank stresses are causing a broad credit crunch. This credit crunch… …and then it will slow the economy. That’s something we’re watching very, very closely,” Minneapolis Fed President Neil Kashkari said Sunday on CBS’ “Face the Nation.”

“It definitely brings us closer,” said Kashkari, who has been the most hawkish Fed policymaker to advocate raising interest rates to fight inflation One of n.

He said it was too early to assess the “impact” of bank stress on the economy, so it was time to know how it would affect the next It’s too early for a crisis. The interest rate decision of the Federal Open Market Committee (FOMC). Meanwhile in Europe, the ECB sees the recent turmoil in the banking sector as likely to lead to lower growth and inflation, its Vice President Luis de Guindos said. explain.

“Our impression is that they will lead to further tightening of credit standards in the Eurozone. Perhaps this will lead to slower growth and slower inflation ,” he told The Business Post. ‘Relevant Signs’

at Switzerland Germany’s 100 Deutsche Bank (ETR :200DBKGn) became the focus of investors.

Shares in Germany’s largest bank fell 8.5 percent on Friday as the cost of insuring its bonds against default rose sharply, and shares in Europe’s top index ean bank fell.

The sudden rise in bank tensions has raised questions about whether the major central banks will continue to aggressively raise interest rates in an attempt to lower inflation and prompted some It’s anybody’s guess as to when interest rates will start to drop.

Erik Nelson, chief economic adviser at UniCredit Banking Group in London, said central banks should not divide the world over concerns that banking woes could lead to widespread Monetary policy has taken a backseat from financial stability amid heightened fears of a financial crisis. “Major central banks, including the Federal Reserve and the European Central Bank, should issue a joint statement, at least until financial markets stabilize Will consider further rate hikes,” Nielsen said in a note on Sunday. The Federal Reserve raised interest rates by a quarter point this week, but is pausing further The rate hike opens the door until it becomes clear how bank lending practices may change following the recent collapse of SVB and New York-based Signature Bank.

“There are some worrying signs. On the positive side, deposit outflows appear to have slowed. Smaller and regional banks are regaining some confidence ,” Kashkari said.

Bank stocks on both sides of the Atlantic wobbled into the weekend despite efforts by rts from politicians, central banks and regulators to allay concerns.

“We’ve seen the capital markets essentially shut down for the past two weeks. If those capital markets keep shutting down because borrowers and lenders are still nervous, then that tells me, well, that could have an impact on the economy. bigger impact,” Kashkari said, adding: “So it’s too early to make any predictions about the next FOMC meeting.”

The Federal Reserve launched an emergency lending program aimed at keeping other regional lenders out of trouble. Recent data shows that funds moved from smaller to larger banks in the days after SVB March crashed, although Fed Chairman Jerome Powell said last week that he thought The situation has “stabilized”.

Banking stress puts U.S., European eyes on credit crunch

China plans new property market support plan to boost economy – Bloomberg

Take Five: Almost half-time

RBA to keep rates at 3.85% in June, but may hike again soon: Reuters poll

LEAVE A REPLY Cancel reply

USA Trends

Messi-mad Indian mom driving to Qatar to see hero in his final World Cup

Drew Brees fakes lightning strike in promotional stunt for online sportsbook

Who could be speaker, if not Kevin McCarthy

3 bold Utah football predictions for Pac-12 Championship vs. USC

LAST NEWS

Galaxy Digital CEO Mike Novogratz Says This Will Kickstart The Bitcoin Bull Market

LSD Tokens Rally As Ethereum Staking Ramps Up, Here Are The Leaders

Horimiya: The Missing Pieces Anime Video Reveals Theme Song, Cast, Debuts July 1st

China plans new property market support plan to boost economy – Bloomberg

Featured NEWS

Europe's new 44-nation club underlines Russia's isolation

WATCH: Waiting On The Bitcoin Monthly: Will Crypto Sink Or Soar? BTCUSD August 31, 2022

AD's bench reaction to OKC: 'Nothing to do with Bron' | Undisputed

The Wire, John Wick, Resident Evil actor Lance Reddick dies

EDITOR PICKS

Galaxy Digital CEO Mike Novogratz Says This Will Kickstart The Bitcoin Bull Market

LSD Tokens Rally As Ethereum Staking Ramps Up, Here Are The Leaders

Horimiya: The Missing Pieces Anime Video Reveals Theme Song, Cast, Debuts July 1st

POPULAR POSTS

Galaxy Digital CEO Mike Novogratz Says This Will Kickstart The Bitcoin Bull Market

LSD Tokens Rally As Ethereum Staking Ramps Up, Here Are The Leaders

Horimiya: The Missing Pieces Anime Video Reveals Theme Song, Cast, Debuts July 1st

POPULAR CATEGORY

ABOUT US

FOLLOW US