Banks Collapsing Indicate Impending Financial Crisis

Bridget Mulroy

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Banks Collapsing Indicate Impending Financial CrisisPhoto by(@urbazon/iStock)

With the recent news of US bank closures, it’s no wonder Americans are on the edge of their seats. Last week, Silicon Valley Bank collapsed, followed by Silvergate Bank, and Signature Bank. Following the pandemic, a financial crisis was expected, yet what is transpiring now is being compared to the financial collapse of 2008.

Americans are wondering if this is only the beginning of something worse to come since other US banks are reporting financial difficulty. 

European banks are also expressing concerns within their financial systems. Credit Suisse (Switzerland) is collapsing, which is an indication of a larger-scale financial event. Last week, Credit Suisse borrowed $50 Million from The Swiss National Bank when its stock shares crashed by 30%.

Bank collapses have happened. Following the Pandemic, three banks closed in the United States, and numerous other banks around the world – it was expected. Before March 2023, Almenta State Bank, The First State Bank, and the First City Bank of Florida closed because they were experiencing financial hardships.

Ultimately, a bank’s collapse occurs when everyone withdraws their money at the same time, and the bank doesn’t have enough capital to absorb the shock of the bank’s loss. Other factors will also influence a bank’s ability to stand.

The United States banks weren’t prepared for the financial crisis in 2008, which made it a tough shock to absorb. Arguably, what’s happening now could have been avoided due to there being more information and resources available today – yet here we are in 2023.

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Hi, I’m Bridget.👩🏻‍🔬 I write about geology & botany... rocks & plants. 🪨🌱🌋

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