US rules out Silicon Valley Bank bailout, start-ups scared

Police walk out of the offices of Silicon Valley Bank in Santa Clara, California on March 10, 2023. © Jeff Chiu/AP

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The financial community is on its guard after the bankruptcy of the Silicon Valley Bank.

The US Treasury Secretary confirmed on Sunday March 12 that the government is ensuring that the rest of the banking system is not affected.

But she ruled out a bailout of the establishment: the very many start-up customers of SVB could then find themselves in a very precarious situation.

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The

, the 16th largest bank in the United States,

that had entrusted it with more than $250,000 of their assets.

Federal insurance will reimburse each client well up to this height, but not beyond.

The main victims are actually the employees of these start-ups.

They could well no longer receive a salary… and a letter of dismissal in the coming days if no solution is quickly found by the financial authorities and their funds remain blocked, reports our correspondent in New York, Carrie

.

But it is also the entire ecosystem supporting the Californian economy that is threatened: paralyzed private equity firms, two regional banks have been suffering from massive withdrawals from their customers for a few days, for example, and the stocks of technology companies are beginning to also to be directly impacted.

One of the leaders in cryptocurrency, Circle, lost 13 points, while the company had placed in SVB 3.3 billion of its 40 billion dollars of reserve.

And the digital currency USDC, considered “ 

 ” because theoretically indexed to the dollar, has thus fallen since Friday, because its creator is none other than the company Circle.

Several other " 

 " - supposed to protect cryptocurrency investors against the legendary volatility of this industry - also stalled, such as the Dai or the USDD.

SVB boasted that its clients were " 

 " of technology and life sciences companies financed by American investors.

Reassure in the face of panic

" 

," said Janet Yellen.

 ,” she continued.

Faced with this movement of panic which took hold of the markets after

, Treasury Secretary Janet Yellen wanted to be reassuring: during an interview with the CBS channel, she explained that the government was working on a resolution of the situation to avoid any contagion, but ruled out a bailout of the establishment.

Let me tell you one thing: the American economy relies on a solid banking system that has the capacity to cover the credit needs of our households and businesses.

It is true that if a bank, and in particular a bank like Silicon Valley Bank - which has billions of dollars in bank deposits - goes bankrupt, it causes concern.

We want to make sure that the problems that affect one bank do not create contagion to others that are strong.

And our goal is to prevent contagion through supervisory and regulatory mechanisms.

US Treasury Secretary Janet Yellen says Washington is working to resolve the situation to avoid 'contagion'

Jelena Tomic

Impact both in the United States and the rest of the world

Observers fear the destruction of an important engine of the American economy.

But on the side of the White House, we are counting on an acquisition of SVB by a more traditional bank.

On Sunday, UK Finance Minister Jeremy Hunt said the fall of SVB posed a " 

 " to Britain's tech sector.

Several entrepreneurs have also alerted, in recent hours, to a possible shock wave for Indian technology start-ups, some of which were SVB customers.

(

AFP)

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