Source: US marshalling 'material action' to stem SVB fallout – Reuters
|US authorities were preparing "material action" on Sunday to shore up deposits in Silicon Valley Bank (SVB) and try to stem any broader financial fallout from the sudden collapse of the tech startup-focused lender, mentioned Reuters while relying on anonymous sources familiar with the matter.
Elsewhere, Bloomberg also cites people familiar with the matter to mention that the US Federal Reserve is considering easing the terms for banks to access its discount window to prevent another collapse similar to Silicon Valley Bank.
Further, Mint reports that the US Federal Reserve will hold a closed-door emergency meeting on Monday of the Board of Governors amid the fallout of the Silicon Valley Bank. The news also adds, “According to a statement released by Fed it will review and determine the advance and discount rates to be charged by the Federal Reserve Banks during the meeting.”
Key quotes
Biden administration officials worked through the weekend to assess the impact of SVB Financial Group's Friday failure, with a particular eye on the venture capital sector and regional banks, the sources said.
Details of an announcement expected on Sunday were not immediately available, but one of the sources said the Federal Reserve could take action similar to what it did to keep banks operating during the COVID-19 pandemic.
U.S. authorities are considering safeguarding all uninsured deposits at SVB, weighing an intervention to prevent what they fear would be panic in the country's financial system, the Washington Post reported, citing three people with knowledge of the matter.
Officials at the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation discussed the idea this weekend, the report said.
CNBC reported that the Fed and the FDIC are discussing two different facilities to manage the fallout from the closure of SVB if no buyer materializes.
US Treasury Secretary Janet Yellen said she was working with banking regulators to respond after SVB became the largest bank to fail since the 2008 financial crisis.
As fears deepened of a broader fallout across the U.S. regional banking sector and beyond, Yellen said she was working to protect depositors, but ruled out a bailout.
Market implications
The SVB fallout shocked global markets and propelled risk-off mood on Friday, drowning the US Treasury bond yields and weighing on the US Dollar. Hence, any positive development on the front can help the US Dollar to regain its upside bias.
Also read: Forex Today: DXY ends week flat after Powell and NFP, ahead of US CPI; Wall Street plunges
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.