Economy
The head of the U.S. Treasury denied the possibility of rescuing the bankrupt bank SVB
The U.S. authorities will not save the bankrupt Silicon Valley Bank, which the regulator in California decided to close. The U.S. Treasury secretary said over the weekend she was working with bank regulators on a suitable plan to manage the situation. She declined to give specific details, but stressed that the U.S. banking system is sound, resilient and well-capitalized. So investors and traders need not worry about the S&P 500, Dow Jones and other indices.
When a bank as large as Silicon Valley Bank collapses, with billions of dollars in its accounts, it’s a concern, Yellen said. The bank’s depositors include many small businesses that depend on access to their funds to pay bills and salaries for tens of thousands of people across the country, the Treasury secretary said.
Authorities are aware of the difficulties depositors will face, and it is a matter of grave concern, she added. Yellen said that one of the main reasons SVB collapsed was the Fed’s rate hike. Because of this, the bank’s assets, many of which are government bonds and mortgage-backed securities, have lost value, the secretary said.
The U.K. authorities are working to insulate local technology and life sciences sectors from the consequences of the collapse of the bank and its British subsidiary, Prime Minister Rishi Sunak said. The U.K. government does not see a systemic threat to the entire banking sector, Sunak said.
Earlier, the Minister of Finance of Great Britain Jeremy Hunt stated that the government will support the suffering bank clients so that they could pay their employees their salaries and fulfill their other obligations. Sunak’s team is relatively relaxed about the situation and expects it to be resolved quickly.
Silicon Valley Bank was the 16th largest U.S. bank. The regulator in California had previously closed the bank because of financial problems, and the Bank of England decided to ask the court to bankrupt the bank’s British subsidiary. The collapse of SVB is the biggest since the financial crisis of 2008. As the agency found out, the companies affected by the collapse of the bank include the CEO of OpenAI, which develops chatbots with artificial intelligence ChatGPT, Sam Altman of his own money.
Earlier, we reported that U.S. regulators unveiled an action plan to deal with the collapse of SVB Bank.
© 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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