German Chancellor says sees no risk of financial crisis in Europe following SVB collapse
BERLIN - German Chancellor Olaf Scholz said on Thursday that he did not see a risk of a new financial crisis in Germany and Europe following the collapse of US Silicon Valley Bank and the uncertain situation around the Switzerland-based global investment bank Credit Suisse.
"I do not see danger. The monetary system is no longer as fragile as it was before the financial crisis [of 2008]," Scholz told the Handelsblatt newspaper.
The German leader added that he did not expect recent developments in the global banking sector to make any serious impact on German depositors, reported Sputnik "Deposits of German savers are safe. Not only due to the enhanced resilience of the banking system and more strict regulation but also due to our economic power," Scholz stated.
Last week, Californian regulators shut down Silicon Valley Bank (SVB), which became the largest US bank to collapse since the 2008 financial crisis. SVB's collapse is believed to be linked to the increase in interest rates by the Federal Reserve System, which caused the impairment of assets on the balance sheets of many financial institutions, and to poor risk management. On Sunday, authorities closed New York-based Signature Bank because of systemic risks; this was the third-largest bank failure in US history.
On Wednesday, Credit Suisse’s share price plunged nearly 30 per cent, sparking concerns about a liquidity crunch. The Swiss Financial Market Supervisory Authority said later that day that Credit Suisse meets liquidity requirements and that the Swiss National Bank will provide liquidity if necessary. On Thursday, Credit Suisse announced the sale of more than US$3 billion in assets, with the Swiss Federal Council convening an emergency meeting on Thursday to discuss the situation. - BERNAMA-SPUTNIK