Financial encyclopedia

Last Wednesday, Silicon Valley Bank suddenly announced that it would seek to raise $2.25 billion, which made an institution with sufficient capital explode the market.

Panic, and extremely fast in 48 hours, ended the 40-year operation. US regulators ordered Silicon Valley Bank to close on Friday night and took over the deposits, since 2008.

The biggest bank failure in the United States since the financial crisis in 2008. Main cause of collapse

1. Centralized business
SVB's main business is relatively small: it mainly provides traditional banking business and risk financing for technology-related startups.

2. Violent interest rate hike
Under the influence of the violent interest rate hike by the United States, when the risk-free interest rate has reached 4.75%, the valuation of technology-related companies belonging to SVB's main customer base plummeted, which led to IPO and pre-listing fund raising.

In the ice age, start-ups had to use bank deposits to survive, resulting in the continuous outflow of deposit funds.

3. The bond depreciated sharply.
During the bull market of technology stocks during the epidemic, Silicon Valley Bank invested 91 billion US dollars in long-term bonds such as US Treasury bonds, and the yield rate of US bonds went up all the way.

Bonds depreciated sharply and suffered serious losses.

Various factors make the squeeze situation more violent, forming a vicious circle, and finally insolvent and bankrupt.

The bankruptcy of Silicon Valley Bank has a long-term impact on technology start-ups, and related VC and newly-created money have been affected. Scholars predict that 10% will close down, and with the poor development of the area,

Without new capital injection, there will be a shortage of funds, which may even trigger a larger wave of bankruptcy.

What the market is most worried about is that the bursting of the technology bubble may be transmitted to the financial system of the United States, and even the financial crisis will repeat itself. Under the domino effect, there seems to be nothing called

It's too big to fail. In a turbulent environment, would you choose to hold US debt, legal tender or safe-haven gold?