The FED opens the ticket gates – Anything to save the banks? There First Republic Bank in the first place, as its name suggests. After a year of soaring interest rates, something finally broke. This is the weakest link in the (ali)banking chain: the Silicon Valley Bank. And pour avoid serial failuresthe FED next see her again Monetary Policy… and restart the ticket machine, while skillfully negotiating the turn to prevent the next link, the First Republic Bank, from giving in.
The FED and central banks to the rescue
Extinguish the fire with paper. Although the analogy is comical, that is what the FED is striving to do with a lot of banknotes to prevent its banking system from burning out. A support for the banks which, although not supposed to show favouritism, would nevertheless have a hidden objective: to save the American bank First Republic Bank.
Last week, the US Federal Reserve (FED) reacted with a accord unprecedented between the central banks many countries: Europe, Switzerland, England, Canada, Japan. This was aimed increase liquidity in dollars on the world markets and speed up convertibility transactions between currencies, until next April 30.
“In order to improve the efficiency of the convertibility of funds into US dollars, central banks currently offer operations in US dollars [à leurs clients] agreed to increase the frequency of these operations from weekly to daily. »
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We must save the soldier First Republic Bank
On the other hand, the American authorities could decide, in the coming days, toextend lines of credit for banks. Without necessarily admitting it, the maneuver would give First Republic Bank time to find a solution to its lack of liquidity and thus avoid a fate similar to that of Silicon Valley Banknamely bankruptcy.
According to a rapport from Bloomberg, the American authorities are working on a safety plan which would allow the First Republic Bank to avoid bankruptcy. Expanding the Fed’s money supply is one of the options being considered. For now, the First Republic Bank is deemed sufficient stable to continue its activities and does not run the immediate risk ofa new bank run.
In order to calm things down, the FED could therefore opt for a new inflow of cash. And although the law stipulates that it must be widely and fairly distributed, it could be that the hidden intention is nevertheless to sauver la First Republic Bank. The banking fire is far from extinguished at the very moment when American savers are gradually leaving regional banks, in order to logically protect their savings within the famous banks. « too big to fail ». Those who are certain of being bailed out by the state in the event of bankruptcy. A mess within traditional finance that suddenly highlights bitcoin fundamentals.
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