Three banks closed in USA: Silvergate, Silicon Valley, and Signature (3S) All ready their closure sent jitters across the globe and contagion might be spreading Excuse for sounding pessimistic but this is just being realistic.
The CSB (Credit Suisse Bank) dived 30% after its largest stockholder said it was no longer supporting the bank The second largest bank saw exodus of deposits of as much as $120 b fled its balance sheet.
While it had no liquidity issues yet, the Swiss Central Bank said it would come to the rescue. The bank is in this situation because of some scandals and bad decisions
It is not unusual for banks to experience liquidity issues once there is a run (a mass withdrawal) because the fractional reserve system and of lending is not fully backed by 100% liquidty - it is fractional, hence there will be shortage of funds
They say that when big banks in US and Europe sneeze, the rest of the world goes into convulsion It is hoped that Asian banks, Philippines are in isolation rooms and would not be affected ($300 billion asset size failure is not just a sneeze after all!)
