A round of banking crises has shaken the United States and Europe. Silicon Valley Bank (SVB) in the U.S. has collapsed after a run, making it the most significant bank failure since the global financial crisis of 2008 and 2009. After that, Silvergate Bank and Signature Bank also failed, while Credit Suisse Group has had to invest 3 billion Swiss francs ($3.3 billion) into the crisis-stricken Credit Suisse. Although the pace of bank failures has slowed and their impact has been limited, it remains unknown whether the SVB incident is just one episode in the fight against inflation or the first sign of more widespread financial crisis. Chinese financial institutions and regulators should seriously consider what lessons can be learned from these bank collapses.
Finance is an industry that manages and controls risks, both domestically and abroad. Monetary and fiscal policies change with macroeconomic conditions, which can squeeze the financial industry. Risks always break through at the weakest point. Just like weak spots in the earth’s crust, where magma can easily erupt, it is no surprise that banks that are poorly managed or lack effective risk control systems are more likely to fall. To resolve this issue, the key is how to prevent and mitigate risks, particularly systemic financial risks.
