The US government has announced measures to stabilize the banking system and alleviate concerns over the potential fallout from the collapse of Silicon Valley Bank. The Federal Deposit Insurance Corporation (FDIC) has ensured that depositors will have access to their funds at SVB, and taxpayers will not bear any losses associated with the bank’s resolution. However, shareholders and some unsecured debt holders will not be protected. In addition, a similar exception was announced for Signature Bank in New York.
Meanwhile, the Federal Reserve has established a new Bank Term Funding Program to provide additional funding to eligible depository institutions, ensuring that banks have the capability to meet the needs of all depositors. This move aims to bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy. These measures are expected to ease concerns over potential systemic risks and promote stability in the banking sector.
