U.S. bank closures
The New York State Department of Financial Services (NYDFS) announced today that it has closed Singature Bank to protect its depositors. It appointed the Federal Deposit Insurance Corporation (FDIC) as its trustee.
As of December 31, 2022, the bank had total assets of approximately ¥14.89 trillion ($110.36 billion) and total deposits of approximately ¥11.95 trillion ($88.59 billion), according to a statement by the authorities. . According to Reuters, the failure of Signature Bank is the third largest in U.S. banking history.
The Signature Bank closure comes just two days after California regulators shut down Silicon Valley Bank (SVB). That’s why the US Federal Reserve on Wednesday announced emergency relief measures aimed at stemming the cycle of unrest in markets and averting a financial system crisis.
connection:US stocks and NY Dow fall for 4 days in a row Silicon Valley Bank collapse raises financial anxiety | 11th Financial Tankan
The U.S. Treasury Department, the U.S. Federal Reserve (Fed) and the U.S. Federal Deposit Insurance Corporation (FDIC) jointly clarified in a statement that the FDIC will protect all deposits of Silicon Valley banks and signature banks under the systemic risk exception. . However, shareholders and some unsecured debtors were not covered, and senior management was dismissed.
The decision was approved by Treasury Secretary Yellen in consultation with President Biden, following recommendations from the FDIC and Fed.
Depositors will be able to access all funds from 13th, according to a statement. The losses associated with the bankruptcies of the two banks will not be borne by taxpayers and will be recovered through special assessments to the banks.
In addition, the Fed said it would provide additional funding to eligible financial institutions “to ensure the ability of banks to meet the needs of all depositors.” A new emergency financing program (BTFP) backed by U.S. Treasuries and mortgage-backed securities will provide liquidity by extending loans for up to one year. The government is said to prepare up to 3.3 trillion yen ($25 billion) to support BTFP.
Impact on the cryptocurrency industry
Signature Bank is a commercial bank licensed in the State of New York. Like Silvergate Bank, which announced the liquidation of its banking business on the 8th, it was known as a major bank providing banking services for the cryptocurrency (virtual currency) industry, and had a network capable of immediate settlement in US dollars. .
Coinbase, the largest exchange in the United States, just announced on the 2nd that it will switch its payment business for institutional investors from Silvergate Bank to Signature Bank.
Coinbase is now using other banking partners to process cash transactions for its users due to the closure of Signature Bank. Also, as of the close of business on the 10th, Signature Bank had a corporate cash balance of approximately 32.3 billion yen ($240 million). said he was.
Impact on Ripple
Brad Garlinghouse, CEO of Ripple, has confirmed that his partner, Silicon Valley Bank, had some of the company’s cash balance.
Setting the record straight on SVB Qs:
Ripple had some exposure to SVB – it was a banking partner, and held some of our cash balance. Fortunately, we expect NO disruption to our day-to-day business, and already held a majority of our USD w/ a broader network of bank partners.
—Brad Garlinghouse (@bgarlinghouse) March 12, 2023
“The balances are sufficient for day-to-day operations, and the company’s cash is held in a broader network of partner banks,” he said. “Ripple is in good financial shape,” he said.
However, he said it was ironic that the series of bank failures highlighted the flaws in the current financial system.
In a remittance system that does not support 24 hours a day, 7 days a week, 365 days a year, and within a deeply divided system, reputational damage has caused a collapse and friction in fund transfers is occurring.
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