The collapse of Silicon Valley Bank serves as a reminder of the importance of robust risk management, sound regulatory oversight and effective liquidity management.
Lenders face a lot of risks, but two of them – interest rate and liquidity – were the main drivers of the sudden and rapid failure of Silicon Valley Bank and Signature Bank. That’s why more trouble may be ahead for the banking sector.
The subprime crisis and the subsequent failure of Lehman Brothers came as such a shock – and the repercussions were so severe that when the time came to mount a response, policy makers were as surprised…