March 23, 2023

Forex World Braces for Bad March Amid SVB Collapse: US Regulators Seek to Safeguard Investors

The forex world has seen many fluctuations in the last month, and new events may signal a very bad month of March. The SVB and Silvergate collapses are just the tip of the iceberg heading into the month, but the US is looking to save investors from such storms in the future.

US Regulators Looking For New Vehicle to Safeguard Investors

The Fed is considering creating a fund allowing regulators to backstop bank deposits in case of financial trouble. The move follows the recent collapse of Silicon Valley Bank. It is intended to provide a safety net for investors and contain any panic that may arise in a similar situation.

In addition, the special vehicle is part of the Fed’s contingency plans for the banking sector, start-up communities, and venture capital sector. However, the Fed has not commented on the report, and FDIC members have not acknowledged questions about the matter.

President Joe Biden recently traveled to California to speak with Governor Gavin Newsom about the collapse of Silicon Valley Bank. The bank’s failure has caused concern among depositors and has had a wider impact on the banking sector, wiping out over $100 billion of market cap in the first 24 hours.

The news has also rippled through the Eurozone, where banks have lost over $50 billion in the same period. In addition, the collapse of Silicon Valley Bank has highlighted the need for regulators to have contingency plans in place in case of similar events.

Silicon Valley Bank collapsed after depositors became concerned about the bank’s financial health. Despite huge bonuses being paid to staff earlier in the week, depositors began withdrawing their funds, leading to a run on the bank. The bank’s collapse has affected the banking sector and has had a broader impact on the start-up and venture capital communities.

The Fed Calls for an Emergency Meeting on Monday

The Fed has announced that it will hold a meeting on Monday to review and analyze the rates that the reserve banks will charge. This meeting is expected to be held behind closed doors, which is an unprecedented move by the board of governors.

The decision to hold a closed-door meeting comes after a week of data from around the world that shows many countries falling deeper into inflation. In addition, on Friday, the US NFP report showed higher-than-expected job growth, but employment data also revealed that it remained stagnant. The Fed did not reveal any further details about the meeting.

Switzerland Continues Battle with Inflation

According to the Swiss National Bank Chairman Thomas Jordan, regulators are doing everything possible to bring down inflation. However, he acknowledges that inflation in the country is currently high, and their main task is to reduce it to under 2%.

These are his last comments before the SNB officially announces its policy decision on March 23. Last week, the SNB did not rule out rate hikes and said they would increase rates if necessary. Over the last nine months, the Swiss National Bank has increased rates three times and is expected to continue its hawkish stance.

The markets predict a 76% chance of rate hikes by 0.50%, while the remaining 24% predict a 0.75% hike. The avid Chairman says that the great contribution of SNB is a good monetary policy that will cater to individuals by stabilizing prices.

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