At the end of last week, one of the things that surprised many happened in Silicon Valley, which is the center of development of various technology companies, when Silicon Valley Bank (SVB) collapsed, making it one of the biggest bank failures in the United States.
For information, this Silicon Valley Bank has been operating since 1983, and had assets of hundreds of billions of dollars before the collapse. Various technology companies in Silicon Valley also use the banking service – including a number of big names such as Etsy, Roblox, Roku, a number of Y Combinator companies, and others.
The bank suffered a fall due to rising interest rates in the United States, which led to the value of the savings bonds held by the bank being slightly lower. Usually this does not have a serious effect, since the bond can be sold when it reaches maturity. However, due to the economic impact, the rate of money coming in slowed down (through investment injections and others), and users of the bank's services started withdrawing money day by day.
In fact, some technology companies are also said to receive instructions from their investors to transfer money from one bank to another - thus making the funds in the bank more affected.
Due to this fall, the bank is now placed under the FDIC (Federal Deposit Insurance Corp). The FDIC is now holding these SVB assets, and says insured depositors of up to $250,000 will be able to access their money back by March 13, 2023.
At the same time, due to the process involved, it is expected to have an impact on the companies that use the banking services. It is said that SVB has around 37,000 businesses with deposits worth over $250,000.
With the balance for those with funds exceeding $250,000 not being accessible, it is expected to impact operations, including in terms of paying business costs, paying salaries, etc.
This is indirectly expected to lead to high impact and risk to the economic system. For now, various parties are struggling to find ways to overcome this problem, including selling SVB's assets, etc.