The only person to blame here is the management risk team at the bank. We knew way way in advance that bonds would get sold off. And they knew they would be underwater billions of dollar. It would of made sense for them to hedge in some way or just sell at a loss before it became an even larger loss.
This is why its not fair that these banks get bailed out for their failed trades at the expense of the tax payer but people who trade equities and crypto never get bailed out by anyone when their trades go sour. Should be an even playing field.
Topic: Crypto Banks ironically went bust from US Treasuries (Read 83 times)
We cannot describe the investment in US Treasury bonds as the reason for all the chaos that occurred, but rather the increase in high-risk investments in those banks and the lack of good management for those banks.
It is difficult to appoint excellent management, but there must be good control methods to predict such problems before they occur and thus reduce them.
In terms of bank investments, more legislation will suffice.
So it is more of a management crisis than an investment crisis.
It is difficult to appoint excellent management, but there must be good control methods to predict such problems before they occur and thus reduce them.
In terms of bank investments, more legislation will suffice.
So it is more of a management crisis than an investment crisis.
U.S. treasury bonds aren't supposed to be high risk but I suppose that analysis changes when the federal reserve is promising interest rates hikes. Very quickly those treasury bonds aren't as valuable as they were once they were purchased.
U.S. treasury bonds aren't directly responsible here but SVB's investment on them turned sour and they were trying to raise capital by selling assets at a loss and the run on the bank commences. I don't see what legislative efforts would do. It's not as if the legislature can control the interest rates that needed to be raised after their reckless spending.
As far as I understood it, the failure of those banks was due to recklessness on the investments they did with their client's money, and the unfortunate coincidence of a lot of people being in need of their money because of the economical situation in America.
On the other hand, while I agree that there is a natural antagonism within the traditional banking world against the crypto ecosystem, for now there is still a necessity for FIAT so many of the operations done in this ecosystem can be performed; comes to mind things like purchase of Bitcoin with bank card, P2P commerce, payment processors which take Bitcoin and swap it for FIAT in behalf of some businesses, ect.
On the other hand, while I agree that there is a natural antagonism within the traditional banking world against the crypto ecosystem, for now there is still a necessity for FIAT so many of the operations done in this ecosystem can be performed; comes to mind things like purchase of Bitcoin with bank card, P2P commerce, payment processors which take Bitcoin and swap it for FIAT in behalf of some businesses, ect.
We cannot describe the investment in US Treasury bonds as the reason for all the chaos that occurred, but rather the increase in high-risk investments in those banks and the lack of good management for those banks.
It is difficult to appoint excellent management, but there must be good control methods to predict such problems before they occur and thus reduce them.
In terms of bank investments, more legislation will suffice.
So it is more of a management crisis than an investment crisis.
It is difficult to appoint excellent management, but there must be good control methods to predict such problems before they occur and thus reduce them.
In terms of bank investments, more legislation will suffice.
So it is more of a management crisis than an investment crisis.
I share in the view of the Federal Reserve as an economist, the apex bank is not actually condemning crypto, if they were, it would be catastrophic. On the contrary, they only alerted banks and financial institutions on careful dealing.
A lot of crypto enthusiasts are naive about the merits and demerits of crypto to society, which is why they will always want it to win against fiat, but things will go awkward if that is the case. This is the reason why a balance must be maintained between the two.
The economy is greater than crypto, which is why I'm so much in support of what will not affect the world's accountability.
Furthermore, the FED was careful in its remark, and below is the actual word according to decrypt
A lot of crypto enthusiasts are naive about the merits and demerits of crypto to society, which is why they will always want it to win against fiat, but things will go awkward if that is the case. This is the reason why a balance must be maintained between the two.
The economy is greater than crypto, which is why I'm so much in support of what will not affect the world's accountability.
Furthermore, the FED was careful in its remark, and below is the actual word according to decrypt
The Federal Reserve Chairman said that innovation shouldn’t be stifled but financial institutions need to take "great care" in how they interact with crypto.
Government influenced mainstream "media" spews propaganda about crypto banks being too risky to the financial system. But it was investing in US Treasury bonds that fell in value from higher interest rates that caused these fiat banks to fail:
https://www.youtube.com/watch?v=oFW-YxFwhdQ
https://www.youtube.com/watch?v=oFW-YxFwhdQ
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