All articles tagged with #global banking system
The Basel Committee on Banking Supervision has released a public consultation paper on a Pillar 3 disclosure framework for climate-related financial risks, as part of its efforts to address these risks to the global banking system and enhance financial stability. The Committee is analyzing how such a framework would strengthen the regulation, supervision, and practices of banks worldwide.
ANZ CEO Shayne Elliott said the recent turmoil in the global banking system has the potential to trigger a financial crisis, but it is too early to predict if it will be similar to the 2008 crisis. He attributed the current condition to the global war on inflation and central banks raising rates quickly to combat it. Australian banks did not suffer as much as those in the US and UK during the 2008 crisis, thanks to tighter lending standards and a more resilient home economy.
Asian shares struggled while US and European stock futures edged higher on hopes authorities were working to ring fence stress in the global banking system, even as the cost of insuring against default neared dangerous levels. The mood remained jittery after shares in Deutsche Bank fell 8.5% on Friday and the cost of insuring its bonds against the risk of default jumped sharply, along with the credit default swaps of many other banks. Depositors have been fleeing smaller banks for their larger cousins or to money market funds. Flows to money market funds have risen by more than $300 billion in the past month to a record atop $5.1 trillion.
The CEO of ANZ, Shayne Elliott, has warned that the recent turmoil in the global banking system has the potential to trigger a financial crisis, although it is too early to predict if it will be similar to the 2008 crisis. Elliott stated that the current condition is different from the 2008 crisis and is related to the global war on inflation and how central banks are raising rates quickly to combat it. Australian banks did not suffer as much as those in the US and UK during the 2008 crisis, thanks to tighter lending standards and a more resilient home economy.
Treasury Secretary Janet Yellen chaired a private meeting with top financial regulators from the Financial Stability Oversight Council amid renewed fears over the global banking system. Regulators have rushed to contain fallout after the implosion of Silicon Valley Bank and Signature Bank earlier in March, including protecting all deposits at the two institutions. However, banks are still feeling the sting from the industry-wide turmoil, and a fresh banking sell-off gripped markets on Friday morning as shares of Deutsche Bank tumbled, reigniting worries about a broader financial crisis.
U.S. Treasury yields fell as concerns over the global banking system grew once again, making Treasurys more appealing to investors. Deutsche Bank's credit default swaps jumped, raising concerns over the health of the European banking industry. The Federal Reserve announced a 25 basis point increase of interest rates and indicated that its rate-hiking campaign could be paused soon, although its battle with inflation continues. Investors will be looking for further hints about the Fed's policy plans on Friday.
Stocks rallied after the Federal Reserve signaled that its rate hiking campaign may be nearing an end amid concerns about stability in the global banking system. The S&P 500 was up 1.5%, the Dow Jones Industrial Average higher by 1.2%, and the technology-heavy Nasdaq Composite led the way, rising as much as 2.1%. The 10-year Treasury yield also fell after the Fed's latest economic forecasts suggested rate hikes are closer to ending than previously expected. Additionally, several big tickers related to the crypto industry were on the move after news since Wednesday's close, including Coinbase and Block.
The world's leading central banks, including the Federal Reserve, European Central Bank, Bank of England, Bank of Canada, Bank of Japan, and Swiss National Bank, have jointly announced new action to make dollar swap lines more readily available in an effort to keep U.S. dollars flowing easily through the global banking system. This move is aimed at increasing the effectiveness of swap lines by making liquidity available daily instead of weekly, and it highlights the severity of the risk global central banks see from the series of strains in the banking system worldwide since Silicon Valley Bank failed nine days ago.
Credit Suisse's shares rose by 30% after announcing it will borrow up to $54 billion from the Swiss central bank to shore up its finances. The move comes after the bank's biggest shareholder said it would not put more money into Credit Suisse, causing shares to plunge by 30%. The European bank shares recovered slightly on Thursday, with the Euro Stoxx Banks index up 1.6% following an 8.4% drop on Wednesday. Credit Suisse has been beset by problems long before the US bank failures, including bad bets on hedge funds, repeated shake-ups of its top management, and a spying scandal involving Zurich rival UBS.