The probable participation of the crypto business in the recent bank meltdown is a contentious issue. Several American officials hold strong views. Others may find the solution less evident.
With $300 billion in backing, the Federal Reserve (Fed) was able to halt the spread of the recent financial crisis. Yet, the issue of the reasons for this predicament, particularly the possible contribution of the crypto economy, crystallizes the exchanges at the level of public authorities. This was noted during discussions between members of the executive and the House of Representatives on the matter.
Neille Liang States that Crypto Field is Probably not Responsible for This
It must be stated that attitudes on the subject are still quite varied. When asked if the industry played a part in the bankruptcy of SVB and Signature, Under Secretary of State for the Treasury Nellie Liang responded, “I don’t think the cryptocurrency businesses played a direct role in these two bankruptcies.”
If culpability exists, it is consequently indirect. This is what may be properly deduced from the manager’s intervention. This viewpoint, however, appears to be unrelated to the position taken on this issue by Michael Barr, Vice Chairman of the Federal Reserve.
“The Crash of SVB is their Own Fault”
According to the latter, who also testified at the proceedings, the failure of these two banks would be the direct result of rash business decisions. This is especially true for SVB, it is said. The decline in the latter is attributed to “classic interest rate risk management.”
In any case, we might argue that the crypto business has had an indirect contribution to the crisis. An assessment based on the latter’s considerable deposits with these institutions. It would have exacerbated the bank run that led to their demise.