Economy
U.S. regulators unveil action plan to deal with the collapse of SVB Bank
Banking regulators-the Federal Reserve, the FDIC and the Treasury Department have developed a plan to support depositors and emergency funding for banks and other financial institutions in response to the bankruptcy of Silicon Valley Bank (SVB). The measures announced by regulators should help overcome panic caused by fears over the collapse of the bank, which was focused on financing technology startups.
The Fed said it is creating the Emergency Financing Facility Program (BTFP) to protect financial institutions affected by the SVB collapse. Regulators said depositors at both SVB and Signature Bank in New York, which were also shut down by regulatory action, will have full access to their deposits starting Monday, March 13. The FDIC’s deposit insurance fund will be used to cover the deposits.
The joint statement notes that no measures to bail out banks at taxpayer expense related to any of the new measures will apply. The FDIC’s term financing facility is loans of up to one year to banks, savings and credit unions, and other financial institutions. Those who take advantage of the financing are asked to provide high-quality collateral against them: Treasury bonds, agency debt and mortgage-backed securities.
The U.S. Treasury Department will allocate up to $25 billion from its monetary stabilization fund to support the term financing program (BTFP). The Fed said it would soften the terms of the funds, which would use the same terms as the BTFP. The stock markets reacted positively, with S&P 500 futures up 1.4% and Nasdaq 100 futures up 1.5% by Sunday evening, March 12. Futures tied to the Dow Jones Industrial Average were up 310 points.
Treasury Secretary Janet Yellen said Sunday morning that there would be no government bailout of SVB. “We’re not going to do it again. But we are concerned about depositors and we are focused on trying to meet their needs,” Yellen told CBS.
The U.S. Treasury secretary said she was working with bank regulators over the weekend on a suitable plan to manage the situation that has arisen.
Earlier, we reported that U.S. regulators promised customers access to deposits in the bankrupt SVB.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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