Analysts Warn of More Bank Failures, Possible Recession and Global Repercussions Caused by First Republic Bank Collapse – Finance Bitcoin News

The recent acquisition of First Republic Bank, the fourth US bank to fail this year, has raised concerns about the potential repercussions of this new failure on the US and international economies. While US President Joe Biden has assured the public that the banking system remains safe, analysts warn that this may not be the last banking failure in this period of turmoil.

Analysts say the first collapse of the Republican bank shows weaknesses in the US banking system

The recent collapse of the First Republic Bank, the second largest banking failure in US history, has set off alarm bells for analysts about the potential repercussions it could have on the country’s economy. While President Joe Biden has maintained that the banking system is safe, some believe that the fourth bank failure in a year could show that the US banking system suffers from systemic weaknesses.

An anonymous investment manager at a bank in Beijing told the Global Times that this new collapse will likely cause more banks to fail in a future liquidity crisis. he advertiser:

The takeover indicates that the problem is more serious than we initially expected, as we thought the crisis had abated after the previous bailout.

Jamie Dimon, CEO of JPMorgan, the bank that acquired First Republic, announce He believes that “this part of the crisis is over”. However, some US analysts think otherwise.

Thomas Peskorsky, a professor at Columbia Business School, believes other banks could be at risk. he announce:

By our calculations, about 200 other banks could fail, many of them smaller (from the First Republic). The cases are not over yet.

Blame the Fed

Many analysts believe that these bank failures have something to do with the hawkish policies of the US Federal Reserve, which has been constantly raising interest rates to bring down inflation rates to 2% since last year. On this, Piskorsky explained:

There are hundreds of banks that have the current market value of assets less than the face value of the debt, and (the crisis) is mainly caused by the interest rate increase by the Federal Reserve.

This may cause the US government to face an unsolvable dilemma, according to Gao Lingyun, of the Chinese Academy of Social Sciences in Beijing. The problem is having to raise interest rates to bring down inflation rates, while also affecting loan values ​​that banks made when those same rates were lower, increasing the risk of default. Gao warned that this, in turn, could contribute to future recessions and other banking failures in more countries.

What do you think of the potential repercussions of the collapse of the First Republic Bank? Tell us in the comments section below.

Sergio Gushchenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, getting into the world of crypto when the price spike occurred during December 2017. Having a background in computer engineering, living in Venezuela, and being affected by the cryptocurrency boom on a social level, he offers a different perspective on the success of crypto and how it helps people. Those who do not deal with banks and the disadvantaged.

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