The collapse of Silicon Valley Bank and shutdown of Signature Bank of New York have sparked global fears of a widespread financial meltdown. Both banks catered to the tech industry. Silicon Valley was important to venture capital firms while Signature was a key financial institution to the cryptocurrency industry. While Silicon Valley Bank is relatively unknown outside of California, it’s an important bank for venture capitalists. In fact, roughly half of U.S. venture capital-backed technology and healthcare companies are financed by Silicon Valley Bank. Some of its clients have included Airbnb, Cisco, Fitbit, and Pinterest. 

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Silicon Valley Bank
Collapse Sends
Global Stocks
Reeling

2. Silicon Valley Bank Collapse Sends Global
Stocks Reeling
 The collapse of Silicon Valley Bank and shutdown of Signature Bank of New
York have sparked global fears of a widespread financial meltdown. Both
banks catered to the tech industry. Silicon Valley was important to
venture capital firms while Signature was a key financial institution to
the cryptocurrency industry.
 While Silicon Valley Bank is relatively unknown outside of California,
it’s an important bank for venture capitalists. In fact, roughly half of
U.S. venture capital-backed technology and healthcare companies are
financed by Silicon Valley Bank. Some of its clients have included Airbnb,
Cisco, Fitbit, and Pinterest.

3. What Happened to Silicon Valley Bank?
 The collapse of Silicon Valley Bank is the second-largest failure of a
federally insured bank in U.S. history. The regional financial
institution held over $200 billion in assets. What brought down the
16th largest bank in the U.S?
 When interest rates were forced to zero, Silicon Valley Bank invested
in long-date U.S. government bonds—bonds have an inverse relationship
with interest rates. When rates rise, bond prices fall. When the
Federal Reserve began to aggressively increase its interest rates to
get a handle on decades-high inflation, Silicon Valley’s bond portfolio
started to lose value.

4. How Will This Affect Interest Rates?
 Central banks have been hiking their interest rates over the last year
to tackle stubbornly high inflation. The Federal Reserve has raised
interest rates from a range of zero to 4.5% while the Bank of Canada
has raised its interest rates from 0.25% to 4.25%.
 The Bank of Canada said it will pause future interest rate increases
while the Federal Reserve has said more hikes are needed to get a
handle on inflation. But the collapse of Silicon Valley Bank and
Signature and now concerns about corporate balance sheets caused by
rising interest rates has put that in jeopardy.
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global-stocks-reeling/

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