[ANALYSIS] Should Filipinos worry about the bank failures abroad?

'We should be wary of policies coming from the Marcos government that can compromise the financial health of our banks. If banks financing the proposed Maharlika Investment Fund get into trouble, that could set off real problems in our own shores.'

On March 10, SVB was placed under the receivership of the Federal Deposit Insurance Corporation , which declared that – rather unusually – all depositors of SVB will get their money back .

However, the tech sector – SVB’s clientele – didn’t want to take out loans from SVB; in fact, they were the ones lending money to SVB through their deposits. So, SVB decided to put their windfall to work by investing in “risk-free” securities issued by the US federal government . So by end-2022, SVB held a whopping $117 billion in long-term government securities as well as mortgage-backed securities .You see, whenever inflation rises significantly, the Federal Reserve steps in to raise interest rates and dissuade people from spending on items like new housing or new vehicles. This, in turn, dampens demand and inflation.

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