The Economist: collapse of the Silicon Valley Bank

The British magazine “The Economist” published a report on the collapse of the “Silicon Valley Bank”, and reviewed the causes of the collapse and its impact on the financial system in the United States, and talked about the possibility of the state’s intervention to save the bank.

The magazine introduced a definition of this bank, stating that it is the 16th largest bank in America with assets amounting to $ 200 billion, and that it is a major lender to large emerging companies in the technology sector in Silicon Valley in California.

It said that the bank’s share price – whose name is abbreviated “SVB” – fell by 60% last Wednesday and then 70% on Friday. Adding that all its management’s appeals to clients to support it failed. Finally it was announced to stop trading in its shares and seize the deposits of its customers which means announcing its collapse.

Government intervention is unpopular, the Economist said, but may be the only option.

Former Treasury Secretary Larry Summers said that if the state gets involved, there is no need to worry that the collapse of SVB will harm other parts of the financial system.

The Economist concluded its report by saying that many people hope that the matter will be as Summers said, and that he is right.