Cetoex News – In an attempt to combat inflation, the Argentina Central Bank has raised interest rates to 97%. Moreover, the country has increased its base interest rate by 600 basis points as the government prepares an announcement regarding its inflation fight. 

In a statement, the Central Bank announced its decision to “immediately” intervene. Subsequently, the initiation sought to prevent “financial volatility,” as the most important factor in its inflation expectation. Currently, the country is engaged in economic uncertainty, with presidential elections looming. 

Argentina Raies Interst Rates to 97%

In what is a vital development, the Argentina Central Bank has announced its intention to raise interest rates to 97%. Additionally, the financial institution spoke on the decision as it continues its fight against rising inflation.

“The BCRA will continue to monitor the evolution of the general price level, the dynamics of financial and foreign exchange markets, and monetary aggregates to calibrate its rate policy,” the Central Bank stated.

The development arrived as the Argentinian consumer price index rose to 102.5% in the month of February. Subsequently, the Central Bank took action. The inflation numbers were the nation’s highest since 1991 and preceded the interest rate increase that took place today. 

Bloomberg previously reported on the potential development of the country. Moreover, noting that the “emergency measures,” were to curve currency losses amidst “spiraling” inflation. Conversely, presidential elections are on the horizon for the country, with its economic state threatened by concerning fragility. 

Brazil’s President Lula De Silva has spoken about his efforts to aid the country. Moreover, it has previously announced that it will no longer settle international trades using the US dollar. Alternatively, it has adopted the Chinese yuan. 

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Cetoex News – First Republic Bank has continued its downward spiral, as shares have fallen another 37% today. Moreover, the plummeting price continues as rumors of a potential government rescue deal persist. Specifically, US officials are reportedly in talks to commence an urgent rescue of the troubled bank.

Shares of First Republic Bank are down approximately 96% since the start of the year. Additionally, Fox Business reported that the stock had fallen more than 50% at midday trading and more than 70% since last month. 

First Republic Bank Fall Continues

A month after a budding banking crisis began in the US, one financial institution is on the brink of collapse. Specifically, First Republic Bank has continued its descent, falling another 37% today. Ultimately falling more than 96% since the start of 2023. 

The development arrives as US government officials have been in “urgent talks” over a potential rescue deal. Additionally, government interference has persisted as the bank itself has been attempting to set in motion a solution to its fading prices.

It was reported that the Federal Deposit Insurance Corporation (FDIC), the Treasury Department, and the Federal Reserve spoke about potential rescue efforts. Moreover, it was expected that the bank would enter FDIC receivership as it continued its fall. 

Alternatively, the government took similar action regarding various banking closures that occurred earlier this year. Conversely, the shutdown of Silicon Valley Bank and Signature Bank, where the first banking closures set off concern over a potential crisis in the sector. Moreover, that shutdown signified the largest banking closures since the 2008 financial crisis. 

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Cetoex News – The American economy had a fairly erratic month in March 2023. The failure of numerous well-known banks turned out to be bad for the whole financial system. In the midst of this, a number of authorities, including U.S. Treasury Secretary Janet Yellen, stated that everything is well and the bank’s liquidity is strong. But Joe Biden, the president, has something different to say.

Biden mentioned earlier today that his government had taken every measure to resolve the financial situation. In spite of this, he feels that the industry’s burden is “not over yet.”

Further instilling a tad bit of hope into the market, Biden added,

“We’ve done what we need to do executively. I feel confident things are settling out. The markets seem to be responding.”

The President also disclosed that the administration has not yet explored all of its options. Biden further said,

“We’re watching very closely. I think my team has handled it very well so far. And rather than get ahead of myself here, I think let’s let things move the way they are.”

Following the downfall of the Silicon Valley Bank and Signature Bank, the U.S. government was forced to step up its game. The Biden administration moved swiftly to enact a number of emergency measures to safeguard depositors at the two banks, and the Federal Reserve contributed extra liquidity to assist banks throughout the sector in meeting the demands of the depositors.

Joe Biden’s administration might bring about legislative changes

In addition to all the things that the government has already done, Biden highlighted the possibility of carrying out legislative changes. Even though this might be hard to achieve in the split Congress, Biden stated,

“I’m not sure whether we get much legislative change. But we’re looking at that as well.”

While several believe that the banking turmoil can’t be contained, the government seems to be trying its best to do so.

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Cetoex News – Ripple’s Chief Technology Officer, David Schwartz, has recently dropped his two cents on the collapse of Silicon Valley Bank. With multiple banks collapsing one by one, it has become difficult for almost anyone not to notice it over the headlines.

Schwartz has recently taken to Twitter to comment on some of his thoughts on the Silicon Valley Bank.

Ripple CTO highlights the anonymity of SVB’s insolvency reason

“Nothing about SVB’s KYC policies or who they extended credit to seems to have anything whatsoever to do with how they became insolvent,” Schwartz said.

He also mentioned that anyone who keeps uninsured funds on deposit with an insolvent bank is not a bright person. Ripple is going through its fair share of trouble with the SEC lawsuit dragging on. In a recent statement, Ripple’s Brad Garlinghouse also addressed the fact that the cryptocurrency firm had a tiny exposure to Silicon Valley Bank.

The collapse of some of the largest cryptocurrency-friendly banks had also raised the question as to whether this is a pre-planned attack against cryptocurrencies. However, despite all the banking chaos, the cryptocurrency market is putting on a positive show. Bitcoin has breached the $28,000 level with over 15% gains in the last seven days, according to CoinMarketCap data.

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Cetoex News – Former Belgian Finance Minister and European Parliament member, Johan Van Overtveldt, has called for a ban on crypto amidst the current banking crisis. Specifically, Van Overtveldt says the digital asset industry provides “no economic or social value.”

The statements came in a tweet from the former Belgian official, speaking on the current panic within the banking sector. Interestingly, Coindesk reports that the comments arrived as European Parliament is preparing “to vote on landmark crypto licensing rules for the bloc.”

Former Belgian Official Attacks Crypto

The banking sector has been infused with renewed panic following several concerning developments. Specifically, Silicon Valley Bank and Signature Bank collapsed in the US, followed by turmoil with Europes Credit Suisse, and a historic rescue plan to save First Republic Bank.

Now, former Belgian Finance Minister and European Parliament member, Johan Van Overtveldt has called for a ban on crypto amidst the developing banking crisis. Moreover, he took to Twitter to share his thoughts on the state of the industry, and crypto’s role.

“Another lesson to be learned from the current banking commotion. Enforce a strict ban on cryptocurrencies,” Van Overtveldt stated. Additionally, labeling the digital assets as pure speculation, containing, “no economic or social value.” Interstingly, Van Overtveldt added, “If the government bans drugs, it should also ban cryptos.”

The contagion from the fall of crypto-friendly bank Silvergate, and Silicon Valley Bank, has perhaps informed the former Belgian official’s stance. Undoubtedly feeding into a narrative that may have spelled doom for Signature Bank. As board member Barney Frank stated its closure sent “a strong anti-crypto message,” from regulators.

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Cetoex News – Banks went through their fair share of crises in 2023 following the cryptocurrency turmoil in 2022. The downfall of leading American financial institutions had widespread ramifications worldwide. The ripple effect of the Silicon Valley Bank’s collapse extended to Switzerland, necessitating government intervention to offer support to Credit Suisse.

According to the latest report from the Financial Times, UBS has offered Credit Suisse up to $1 billion to acquire the bank.

UBS put out the offer on Sunday

According to information from people who have direct knowledge of the matter, the Swiss authorities are planning to bypass a shareholder vote. This is to finalize the transaction and the deal before Monday.

The Financial Times also reported that the offer was laid out on Sunday morning, with the share price of UBS stock set for SFro.25. The offer is way down from the closing price of SFr1.86 on Friday.

The individuals who were familiar with the situation also stressed that the terms of the deal are likely to change. The situation is fast-moving, getting updated each day. They also added that the terms were greatly influenced by FINMA and the Swiss National Bank.

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Cetoex News – Leading American financial institutions’ demise has broad global repercussions. The failure of the Silicon Valley Bank had repercussions throughout Switzerland, prompting government action to protect Credit Suisse.

The latest report also highlighted that UBS has offered Credit Suisse up to $1 billion to purchase the bank. Amidst this, it has come to light that the Swiss authorities are considering the partial or full nationalization of the bank.

Swiss authorities considering nationalizing Credit Suisse

The information was shared by people familiar with the matter, as the only considerable option, apart from the offer by UBS. The individuals asked for anonymity according to Bloomberg, and stated that Switzerland is looking into the option of either taking over the bank fully or holding a significant equity stake.

The details also reveal that the decision can fluctuate and vary depending on the decision taken by the authorities. The takeover of a bank appears to be difficult as well due to the complexities of the government.

The downfall of the Credit Suisse bank is a follow-up to the collapse of three large banks, including Silvergate, Silicon Valley, and Signature. While the banks are exhibiting a struggle to survive, the cryptocurrency market is flourishing with assets in good shape.

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Cetoex News – A recent study by economists identified 186 banks at risk. These banks face issues similar to that which caused the collapse of Silicon Valley Bank. SIVB collapsed earlier this week due to the bank’s assets being diminished by increasing interest rates. This led to concerned customers withdrawing their uninsured deposits.

During the Federal Reserve’s swift rate-hike campaign, the economists evaluated individual U.S. banks. They assessed asset books and market value losses. Assets such as Treasury notes and mortgage loans can decrease in value. This happens when new bonds offer higher rates. The economists also analyzed the banks’ funding percentages. They focused on funding derived from uninsured depositors, those with accounts holding over $250,000.

Their findings suggest a potential problem. If half of these uninsured depositors were to withdraw funds rapidly from any of these 186 U.S. banks, even insured depositors might face impairments. This is due to insufficient assets available for all depositors. In such cases, intervention from the FDIC could become necessary.

It is crucial to note a significant limitation in this research. The study does not consider hedging strategies. These strategies may safeguard numerous banks against rising interest rates.

In their paper, the economists stated: “Our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization.”

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Cetoex News – Following the closure of Silicon Valley Bank last week, First Republic has seen its stock crash to an all-time low, according to Forbes. Specifically, the report noted shares plummeted another 30% on Thursday, as the California-based bank is “weighing a sale.”

The report notes that the stock plummeted to $22 on Thursday morning before trading was halted on the New York Stock Exchange. Moreover, the drop signifies, “its lowest share price since going public in 2010,” according to Forbes.

First Republic Next to Fall?

The past few weeks have induced new panic in the financial sector, as several US banks have collapsed. Specifically, Silicon Valley Bank and Signature bank were closed by regulators on Sunday. The Federal Reserve announced a ballot procedure to protect depositors of the failed bank.

Per their website, First Republic is a top-25 bank in the US by asset size. They manage $212 billion in assets with $174 billion in deposits as of the end of 2022.

A banking crisis could continue, as First Republic stock has crashed to an all-time low, according to Forbes. Specifically, the report noted that shares for the California-based bank fell 30% on Thursday, reading at $22 before trading was halted on the New York Stock Exchange.

Concerningly, Forbes notes that First Republic shares are down an astronomic 81% since last Wednesday. Subsequently, equating to “by far the largest drop of any S&P 500 constitute in the period even as the index dropped 3% while other bank stocks crashed.”

Additionally, the report notes that the dropping price is connected to investor concerns. Again, the report notes that worry is seeding in “over the company’s future,” following the closure of SVB and Signature Bank. Conversely, First Republic noted on Sunday that it “secured $70 billion in further liquidity from the Federal Reserve.” However, it didn’t keep S&P Global Ratings and Fitch Ratings from lowering the bank’s rating to junk last week.

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Cetoex News – Signature Bank was the third victim of the back-to-back bank collapses recently. The year 2023 has been ablaze with headlines about the unexpected shutdowns of some of the banking industry’s titans. The likes of Silvergate Bank, Silicon Valley Bank, and Signature Bank have all bitten the dust. These three financial giants share a common characteristic: they are all known for their support of cryptocurrency businesses.

Barney Frank, a board member of the Signature Bank, earlier stated that the action was a very strong “anti-crypto message” by the authorities. Now, according to the latest news shared by two anonymous sources with Reuters, the Federal Deposit Insurance Corporation (FDIC) has asked the buyers of Signature Bank to stop doing business with cryptocurrency firms.

Is Signature Bank and other shutdowns part of an anti-crypto plan?

The reports, if proven true, will confirm the fact that the regulators brought down the bank as a part of their anti-crypto message. Frank’s earlier statement was dismissed by the New York Department of Financial Services.

According to the Reuters report, bidders or potential buyers were asked to cut their ties with cryptocurrency businesses. The regulators’ scrutiny tightened after the collapse of FTX and reached its peak in February. However, amidst all the turmoil, cryptocurrencies exhibited a positive run.

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