The 2nd & 3rd biggest bank failures in history happened this weekend. First Silicon Valley Bank and now Signature Bank. Will there be more? I've worked 10 years in Banking so let me explain:
• Protecting your money
• The Bank failure
• Bank runs
• Bailouts
Let's discuss:
Signature Bank $SBNY was shut down today due to systemic risk. 94% of deposits with Signature Bank are not FDIC insured. Regulators warned that keeping the bank open would threaten the stability of the entire financial system. Also, Coinbase $COIN holds $240 million with SB
Be careful who you take investment advice from. Last year, Signature Bank $SBNY was Jim Cramers #1 Bank Pick:
Both Silicon Valley Bank and Signature Bank are receiving bailouts from the Government Today, President Biden and his administration announced a new bank term funding program to help Banks
The Govenment also said that it sees other Banks with issues similar to Silicon Valley Bank & Signature Bank. I wonder which Banks may be next? Any guesses?
The United States had many other bank failures in the past Banks fail because they cannot meet financial obligations or provide liquidity to customers. This can happen due to many reasons (bank runs, high-risk lending practices, economic downturns, fraud, mismanagement)
A bank run happens when a lot of customers withdraw their funds from a bank at the same time (due to concerns about the bank's solvency). Bank runs can drain a bank's reserves and lead to its failure. The FDIC was created to prevent bank runs.
The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the federal government that provides insurance to depositors if a bank failure occurs. FDIC insurance covers up to $250,000 per depositor per bank.
You can protect your money from bank failure by making sure that your deposits are fully insured by the FDIC. You can also spread your deposits across multiple banks to reduce your exposure to any one bank's failure.
A bank becomes insolvent when it can no longer meet its financial obligations to its customers. The aim of a Bank bailout is to stabilize the financial system and prevent widespread economic damage.
The 2008 banking crisis was a financial crisis that began in the U.S. housing market. It led to a surge of real estate foreclosures and then the failure of many large banks, and required government bailouts to prevent further damage to the financial system.
The Federal Reserve System (the Fed) is the central bank of the United States. The Fed supervises and regulates banks and provides financial services to the U.S. government and financial institutions.
The Federal Reserve was created in 1913 as a response to the many bank failures that happened in the 19th and 20th centuries. The purpose of the Federal Reserve is to regulate the money supply, stabilize the banking system, and promote economic growth.
The Federal Reserve controls the money and economy by adjusting interest rates, controlling inflation, and providing liquidity to banks.
In 1971, the United States ended the gold standard, which had been in place since 1879. The gold standard was a system where the value of the US dollar was tied to a fixed amount of gold.
The decision to leave the gold standard was driven by the need to pay for the Vietnam War, which required the printing of large amounts of money. Since then, the value of the US dollar has been based on faith in the government and the strength of the US economy.
The US dollar's dominant role in the international oil trade is referred to as the petrodollar. In the 70s, the US negotiated with the Saudis to price oil in US dollars. This created demand for US dollars around the world and the dollar's status as the world's reserve currency.
Leaving the gold standard allows for the expansion of the money supply, but exposes the US dollar to market fluctuations. The petrodollar has helped to maintain the US dollar's status as the world's reserve currency, but also creates geopolitical risks related to oil trade.
#bitcoin operates outside of traditional banking and is not backed by any government or central authority. Bitcoin is not subject to the same risks and vulnerabilities as traditional banking systems, such as bank failures and bank runs.
Can Bitcoin solve these problems?
My Thoughts: That's hard yes, except not only Bitcoin. There will be other cryptocurrencies complementing it.
#crypto2023 #BTC #BNB #buildtogether
