What Canada can learn from the collapse of Silicon Valley Bank

Silicon Valley Bank, the sixteenth-largest bank in the U.S., collapsed on March 10, 2023 after customers tried to collectively withdraw $42 billion in a single day. (AP Photo/Jeff Chiu)

The sudden collapse of Silicon Valley Bank left its investors reeling, shocked and unsure of what had happened to their funds. SVB was one of the top 20 banks in the United States, and many had trusted their money with the bank, unaware of the crisis that was brewing.

The U.S. Federal Deposit Insurance Corporation (FDIC) intervened to guarantee all deposits to customers, even those above the $250,000 limit. Silicon Valley Bank’s failure was technically due to a liquidity crisis — a lack of sufficient cash inflows to sustain it during a period of significant cash outflows.