Insight

Why Credit Suisse, Silicon Valley Bank don't point to a financial crisis

16 March 2023
Brian Levitt
Brian Levitt
Global Market Strategist, North America
Why Credit Suisse, Silicon Valley Bank don't point to a financial crisis
Key takeaways
Byproduct of tightening
1

Tightening cycles in 1984 and 1990 led to banking issues but didn’t result in severe recessions or threaten the global financial system.

Not a solvency issue
2

Bank asset quality, in aggregate, is sound.1 Today’s challenges are funding and liquidity issues.

There may be more
3

That’s how tightening cycles tend to play out. Policymakers are ready to respond and financial system should withstand challenges.

  • 1

    Source: US Federal Reserve. As represented by tier one capital ratios.
  • 2

    Source: Bloomberg. As represented by the peak to trough decline associated with the 2008 recession in the S&P 500 Index.
  • 3

    Source: Federal Deposit Insurance Corporation
  • 4

    Source: Federal Deposit Insurance Corporation
  • 5

    Source: US Federal Reserve. As represented by tier one capital ratios.
  • 6

    Source: Bloomberg.  As represented by the 5-year returns from 1985 to 1989 and 1991 to 1995 of the S&P 500 Index.

Related insights