US considers extra support for banks in crisis

The US banking crisis is still in full swing and in this context the authorities are considering extending credit lines for banks. That could, in theory, give First Republic Bank time to accumulate a buffer and bail itself out. On March 26 claims Bloomberg based on anonymous sources that they in the United States are thinking aloud about what to do with the problem, especially in the form of First Republic Bank.

Expanding Federal Reserve Options

One option currently being considered is to expand the facilities at the Federal Reserve. First Republic was initially identified as a bank stable enough to continue operating without immediate support from the authorities.

If it is chosen to expand the facilities at the Federal Reserve, the idea is to apply this to all banks. The measures would therefore not be aimed at a selective group of banks, which was initially criticized.

In the United States, people were afraid that only the somewhat larger banks would be eligible for aid, which could cause problems for the smaller and regional banks. After all, if customers of those banks realize that their assets are not safe there, but they are with the bigger boys, then the choice to switch is of course quickly made.

Structural challenges with the balance

Although the authorities believe that First Republic does indeed face structural problems with regard to financial management, they do not see the same risk as Silicon Valley Bank. In the case of the latter bank, customers panicked and decided en masse to withdraw their funds there, causing the bank to collapse.

“First Republic has cash to honor customer withdrawal requests, the sources say. That includes the $30 billion deposited by America’s largest banks this month.”

It therefore appears that the banking crisis in the United States is not yet over and that an exciting period is ahead for the entire financial industry. Could this mean the definitive breakthrough for bitcoin (BTC) as an alternative asset? We may learn that in the coming months.

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