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1. I. Mirco economy:
Câu 1: Về Fitness industry
The fitness industry often reduces prices and offers discounts on fitness equipment,
video workouts, and gym memberships after the first of the year to capitalize on the
high demand generated by people's New Year's resolutions to get in shape and lose
weight. There are a few reasons why this happens:
In economics, the concept of elasticity is used to measure the responsiveness of
quantity demanded or supplied to changes in price or other relevant factors.
Applying elasticity theory to the scenario of fitness businesses reducing prices after
the New Year, we can examine how the demand for fitness equipment, video
workouts, and gym memberships behaves.
Price Elasticity of Demand: The price elasticity of demand measures the sensitivity
of the quantity demanded to changes in price. In the context of fitness products and
services, if the demand is elastic, a decrease in price will lead to a proportionately
larger increase in quantity demanded. By reducing prices, fitness businesses can
attract more customers and generate additional sales, even if profit margins per unit
are lower. The elasticity of demand for fitness products and services during the New
Year period plays a significant role in determining the extent of price reductions.
Cross-Price Elasticity: Cross-price elasticity measures the responsiveness of the
quantity demanded for one good to changes in the price of another related good. In
this case, it would reflect how the demand for fitness equipment, video workouts, or
gym memberships changes when the prices of these items are altered. Fitness
businesses may strategically reduce the prices of gym memberships or video
workouts to increase their attractiveness relative to other options like home fitness
equipment. The cross-price elasticity between these different fitness offerings can
influence the extent to which businesses adjust their prices.
Income Elasticity: Income elasticity measures how changes in consumers' income
affect the quantity demanded for a particular good or service. While it may not
directly apply to the scenario of post-New Year price reductions, it is worth noting
that some individuals might have higher disposable income at the beginning of the
year due to holiday bonuses or financial resolutions. This increased income can make
them more willing to spend on fitness products or services, further contributing to
the demand for discounted offerings.

2. Time Elasticity: Time elasticity refers to the responsiveness of quantity demanded
or supplied to changes in time. In this context, it relates to the seasonal nature of the
fitness industry. Fitness businesses understand that people's interest in health and
fitness tends to be higher at the beginning of the year due to New Year's resolutions.
By reducing prices during this time, they aim to take advantage of the time sensitivity
of demand and encourage individuals to make purchases while their motivation is
high.
By considering these different elasticities, fitness businesses can strategically
determine the level of price reductions that will yield the desired increase in quantity
demanded and overall profitability. They need to assess the responsiveness of
demand to price changes, the competitive landscape, and the market dynamics to
make informed pricing decisions and effectively capitalize on the increased demand
after the New Year.
Câu 2: In an article about the financial problems of USA Today, Newsweek
reported that the paper was losing about $20 million a year. A Wall Street
analyst said that the paper should raise its price from 50 cents to 75 cents, which
he estimated would bring in an additional $65 million a year. The paper's
publisher rejected the idea, saying that circulation could drop sharply after a
price increase, citing The Wall Street Journal's experience after it increased its
price to 75 cents. What implicit assumptions are the publisher and the analyst
making about price elasticity?
The implicit assumptions about price elasticity made by the publisher and
the analyst in this scenario are as follows:
1. Publisher's Implicit Assumption: The publisher assumes that the price
increase from 50 cents to 75 cents would result in a sharp drop in
circulation. This assumption suggests that the publisher believes the
demand for USA Today is highly elastic, meaning that a relatively
small increase in price would lead to a proportionally larger decrease
in quantity demanded. In other words, the publisher expects that
readers are very sensitive to price changes and would significantly
reduce their purchases if the price were raised.
2. Analyst's Implicit Assumption: The analyst assumes that the price
increase from 50 cents to 75 cents would result in an additional $65
million in revenue per year. This assumption suggests that the analyst

3. believes the demand for USA Today is relatively inelastic, meaning
that a price increase would have a smaller impact on the quantity
demanded. The analyst expects that readers are less sensitive to price
changes and would continue to purchase the newspaper even at the
higher price.
Both assumptions are based on differing beliefs about the price elasticity of
demand for USA Today. The publisher assumes high price elasticity, while
the analyst assumes low price elasticity. These assumptions drive their
opposing views on the potential impact of a price increase on circulation
and revenue.
Câu 3: 1. Rapel Valley in Chile is renowned for its ability to produce high-
quality wine at a fraction of the cost of many other vineyards around the world.
Rapel Valley produces over 20 million bottles of wine annually, of which 5
million are exported to the United States. Strong La Niña weather patterns have
caused unusually cold temperatures, devastating many of the wine producers
in that region of Chile. How will La Niña affect the price of Chilean wine?
Assuming La Niña does not impact the California wine-producing region, how
will La Niña impact the market for Californian wine.
La Niña weather patterns causing unusually cold temperatures in the Rapel
Valley of Chile can have several effects on the price of Chilean wine:
1. Reduced Supply: The cold temperatures may lead to damage and loss
of grape crops in the Rapel Valley. This reduction in the grape harvest
can result in a decreased supply of Chilean wine, as fewer grapes are
available for production. With lower supply, the price of Chilean wine
is likely to increase due to the scarcity of the product.
2. Increased Production Costs: The adverse weather conditions may
necessitate additional measures and resources to protect the
vineyards, such as heaters, coverings, or other methods to mitigate
the cold. These additional costs can raise the production expenses for
winemakers, potentially leading to higher prices for Chilean wine.

4. 3. Shift in Export Patterns: With the reduced supply of Chilean wine,
particularly in the Rapel Valley, there may be a shift in export
patterns. Winemakers in Chile might prioritize fulfilling domestic
demand or redirect exports to other markets where there is less
competition or higher profitability. This shift can impact the
availability and price of Chilean wine in the United States and other
export destinations.
Regarding the impact of La Niña on the market for Californian wine,
assuming the California wine-producing region is not significantly affected,
several dynamics may come into play:
1. Competitive Advantage: If Chilean wine prices increase due to the
impact of La Niña, Californian wines may become relatively more
competitive in terms of pricing. The higher price of Chilean wine can
create an opportunity for California wines to capture market share or
increase sales, especially if their prices remain stable.
2. Shift in Consumer Preferences: Consumers who typically purchase
Chilean wine may explore alternative options due to the higher prices
caused by the impact of La Niña. This could lead to a potential
increase in demand for Californian wines as consumers seek
comparable alternatives from different regions.
3. Supply and Demand Dynamics: If Chilean wine supply decreases due
to the effects of La Niña, and assuming demand for wine remains
relatively stable, it could create a gap in the market that Californian
winemakers might be able to fill. The relatively stable supply of
Californian wine, combined with the potential increase in demand,
can influence the market dynamics and potentially lead to increased
prices or sales for Californian wine.
It's important to note that these are potential scenarios based on the given
assumptions. The actual impact of La Niña on the prices and market
dynamics of Chilean and Californian wines can be influenced by various
other factors, including consumer preferences, production capacity, global

5. market conditions, and the overall supply-demand dynamics in the wine
industry.
Câu 4: The CEO of a major automaker overheard one of its division managers
make the following statement regarding the firm's production plans: "In order
to maximize profits, it is essential that we operate at the minimum point of our
average total cost curve." If you were the CEO of the automaker, would you
praise or chastise the manager? Explain.
As the CEO of the automaker, I would chastise the manager for making the
statement that operating at the minimum point of the average total cost (ATC)
curve is essential to maximize profits. While it may seem logical to assume that
operating at the minimum ATC would maximize profits, this assumption is flawed.
The statement disregards the fundamental concept of profit maximization, which is
based on marginal analysis rather than average cost analysis. To maximize profits,
a firm should produce at the quantity where marginal cost (MC) equals marginal
revenue (MR). This occurs where the marginal cost curve intersects the marginal
revenue curve.
Operating at the minimum point of the ATC curve means producing at a level
where average costs are minimized, but it does not guarantee that the firm is
maximizing its profits. Profit maximization requires considering the relationship
between costs, revenues, and output on the margin.
If the manager's focus is solely on minimizing average costs, they may overlook
the fact that producing at the minimum ATC could result in an output level that is
not aligned with market demand. The firm could be producing either too much or
too little, which could lead to missed profit opportunities.
As the CEO, I would emphasize the importance of considering marginal analysis
and the need to align production with market demand. I would encourage the
manager to understand the concept of marginal cost and marginal revenue and to
make production decisions based on the optimal balance between costs and
revenues on the margin, rather than solely relying on average cost considerations.

6. Câu 5: When McDonald's Corp. reduced the price of its Big Mac by 75 percent
if customers also purchased french fries and a soft drink, The Wall Street
Journal reported that the company was hoping the novel promotion would
revive its U.S. sales growth. It didn't. Within two weeks sales had fallen. Using
your knowledge of game theory, what do you think disrupted McDonald's
plans?
Based on the information provided, it appears that McDonald's attempted
to use a promotional strategy to boost its sales by offering a discounted
price for the Big Mac when customers also purchased french fries and a soft
drink. However, the sales fell within two weeks, suggesting that the strategy
did not achieve the desired outcome. To analyze this situation from a game
theory perspective, we can consider the potential factors that may have
disrupted McDonald's plans:
1. Substitution Effect: Customers may have substituted their regular
purchases of individual items (Big Mac, fries, soft drink) with the
discounted bundle offer. This could have resulted in a lower overall
revenue for McDonald's if the discounted bundle price was not
sufficient to compensate for the reduction in individual item sales.
2. Complementary Goods: Despite the discount, customers may not
have found sufficient value in purchasing the bundle of Big Mac, fries,
and a soft drink together. They may have preferred to choose their
desired items individually, or the specific combination of products
may not have been appealing to a significant portion of McDonald's
customer base.
3. Consumer Perception: The promotion may have been perceived as a
temporary or desperate measure, leading customers to question the
quality or value of the products. If customers did not perceive the
discounted bundle as a genuine value proposition, they may have
been hesitant to participate, resulting in lower sales.
4. Price-Quality Relationship: Customers may associate price reductions
with a decrease in quality. The significant price reduction on the Big
Mac as part of the bundle offer could have signaled to some

7. customers that there was a reduction in quality or value, which might
have deterred them from making a purchase.
5. Market Competition: McDonald's competitors may have responded to
the promotion by adjusting their own prices or launching counter-
promotions. If competitors offered better deals or more attractive
alternatives, customers might have shifted their preferences away
from McDonald's, leading to a decline in sales.
It's important to note that without further details or data, it's challenging to
determine the exact factors that disrupted McDonald's plans. However,
considering these possible game theory dynamics can provide some
insights into why the promotion did not revive sales growth as expected.
Câu 6: Case HoneyBee Farm
In a competitive market, prices are determined by the forces of supply and demand.
If the market price for honey is below the cost of production, honey farmers may
struggle to make a profit. In this case, the government may intervene by
implementing a support price, which is a minimum price at which the government
agrees to purchase honey from farmers.
While support prices can provide a short-term solution to low market prices, they
can also have unintended consequences in the long run. If support prices are set
higher than the market price, it can lead to an oversupply of honey and a surplus of
inventory. This can result in a buildup of unsold honey, which can lead to a drop in
market prices, as the surplus honey floods the market.
Furthermore, higher support prices can also lead to an increase in production, as
more farmers may be incentivized to enter the market due to the guaranteed
minimum price. This can exacerbate the oversupply issue and lead to further price
drops.
In the long run, the best solution for honey farmers may not be higher support prices,
but rather finding ways to increase efficiency and reduce costs of production. This
could involve adopting new technologies, improving farming practices, or exploring
new markets for their products.

8. II. Macro Economy
Câu 1: Economic growth: human capital, technology, incentives of market,
environment, capital resources, ... What does each country rely on for soaring
growth? Why is the U.S. growing GDP more than other countries?
Economic growth is a complex phenomenon influenced by various factors.
Different countries rely on different drivers of growth, and the reasons behind the
higher GDP growth of the United States compared to other countries are
multifaceted. Here are some key factors that contribute to economic growth:
1. Human Capital: A skilled and educated workforce is vital for economic
growth. Countries that invest in quality education, vocational training, and
skill development programs can enhance their human capital. A highly
skilled labor force can drive innovation, productivity, and competitiveness,
leading to sustained economic growth.
2. Technological Advancement: Embracing and investing in technology and
innovation is crucial for economic growth. Countries that promote research
and development, encourage entrepreneurship, and foster an environment
conducive to technological advancements can experience accelerated
economic growth. Technological progress can lead to increased productivity,
efficiency gains, and the development of new industries.
3. Market Incentives: Well-functioning markets with efficient allocation of
resources, fair competition, and strong property rights protection provide the
necessary incentives for economic growth. Countries that have open and
competitive markets, favorable business environments, and supportive
regulations attract investments, stimulate entrepreneurship, and drive
economic growth.
4. Natural Resources: Abundance and efficient utilization of natural resources
can positively contribute to economic growth in some countries. Nations rich
in natural resources, such as oil, minerals, or fertile land, can leverage these
resources to drive economic development and export earnings. However, it's
important to manage these resources sustainably to ensure long-term growth
and avoid dependency on volatile commodity prices.
5. Infrastructure and Capital Resources: Adequate infrastructure, including
transportation, energy, and communication networks, is essential for
economic growth. Access to reliable infrastructure and well-developed

9. capital resources facilitates business operations, trade, and investment,
promoting economic development. Countries that invest in infrastructure
development can attract investments, enhance productivity, and drive
economic growth.
Regarding the higher GDP growth of the United States compared to other
countries, several factors contribute to this phenomenon:
a. Technological Innovation: The United States has a long history of technological
innovation and entrepreneurial spirit. The country has a robust research and
development sector, significant investments in cutting-edge technologies, and a
supportive environment for start-ups and innovation. This has contributed to the
growth of high-tech industries, productivity gains, and overall economic growth.
b. Market Size and Diversity: The U.S. market is large and diverse, offering
significant opportunities for businesses to scale and grow. The size of the domestic
market provides a strong foundation for economic growth, allowing companies to
reach a substantial consumer base and benefit from economies of scale. The
diversity of industries and sectors also contributes to resilience and adaptability in
the face of economic challenges.
c. Business Environment and Institutions: The United States has a well-developed
business environment characterized by strong legal frameworks, protection of
property rights, and efficient financial markets. This fosters entrepreneurship,
attracts investments, and supports business growth. Additionally, institutions such
as well-functioning regulatory bodies, transparent governance, and effective rule of
law contribute to a conducive business environment and promote economic
growth.
d. Flexibility and Adaptability: The U.S. economy is known for its flexibility and
ability to adapt to changing market conditions. This allows businesses to respond
quickly to opportunities and challenges, fostering innovation and growth. The
dynamic nature of the U.S. economy, combined with its openness to global trade
and investment, contributes to its relatively higher GDP growth compared to some
other countries.
It's important to note that economic growth is influenced by a multitude of factors,
and the relative importance of each factor can vary across countries. Different
countries adopt different strategies and policies to foster economic growth based
on their unique circumstances and available resources.

10. Câu 2: Tại sao khi crisis, MS ko gây lạm phát nhưng khi kinh tế bình thường
thì gây lạm phát
The relationship between money supply and inflation can vary depending on the
state of the economy, specifically whether it is in a crisis or normal economic
conditions. Let's examine the reasons for inflation and why the impact of money
supply differs in these two scenarios:
Reasons for Inflation:
1. Demand-Pull Inflation: This type of inflation occurs when aggregate
demand exceeds the economy's ability to produce goods and services. When
demand outpaces supply, prices rise. This can happen due to factors such as
increased consumer spending, government expenditure, or exports. In such
cases, excessive money supply can contribute to demand-pull inflation by
increasing consumers' purchasing power and stimulating spending.
2. Cost-Push Inflation: Cost-push inflation arises when the costs of production,
such as wages or raw materials, increase, and businesses pass on these higher
costs to consumers through price hikes. Factors like rising energy prices,
increased wages, or supply chain disruptions can cause cost-push inflation.
Money supply does not directly cause this type of inflation, but it can
exacerbate the situation by amplifying the impact of rising costs on prices.
Impact of Money Supply in Crisis Economy: During a crisis, such as a severe
economic downturn or recession, the relationship between money supply and
inflation may not follow the usual pattern. In a crisis economy, several factors come
into play that can influence the impact of money supply on inflation:
1. Reduced Aggregate Demand: During a crisis, consumers tend to cut back on
spending, leading to a decrease in aggregate demand. This decrease in demand
can counterbalance the effect of increased money supply, mitigating
inflationary pressures.
2. Deflationary Pressures: In a crisis, there is often a risk of deflation, where
prices overall start to decline. Deflation can occur due to weak consumer
spending, excess capacity in production, or a lack of confidence in the
economy. In such situations, even if money supply increases, the overall
impact on prices may be limited or even negative.

11. 3. Lower Velocity of Money: The velocity of money refers to the speed at which
money circulates through the economy. During a crisis, the velocity of money
tends to decline as people hoard cash, businesses reduce investment, and
lending activity slows down. When money circulates slowly, the impact of
increased money supply on inflation is diminished.
Impact of Money Supply in Normal Economy: In a normal, stable economy, the
impact of money supply on inflation is more pronounced due to different conditions:
1. Stronger Aggregate Demand: In a normal economy, aggregate demand is
generally stronger, and consumers have more purchasing power. When money
supply increases, it can stimulate additional spending and push demand
beyond the economy's capacity to produce, leading to inflationary pressures.
2. Normalized Velocity of Money: In a stable economy, the velocity of money
tends to be higher as confidence and economic activity are stronger. When
money circulates quickly, an increase in money supply can more readily
translate into increased spending and inflation.
3. Inflation Expectations: In a normal economy, people and businesses have a
general expectation that prices will gradually increase over time. This
expectation can further amplify the impact of increased money supply on
inflation, as consumers may spend more to avoid anticipated price increases,
fueling demand-pull inflation.
It's important to note that these are general tendencies, and the relationship between
money supply and inflation is influenced by various other factors, such as
government policies, global economic conditions, and market expectations. Central
banks and policymakers closely monitor these dynamics to manage inflation and
stabilize the economy.
Câu 3: Based on financial crisis, explain the collapse of banks
The collapse of banks during a financial crisis can be attributed to a combination of
factors that contribute to their vulnerability and eventual failure. Here are some key
factors that can lead to the collapse of banks in a financial crisis:
1. Asset Quality Deterioration: One of the primary reasons for bank failures
during a financial crisis is the deterioration of asset quality. Banks often face
significant losses when the value of their loan portfolios declines due to
defaults, bankruptcies, or a sharp decrease in collateral values. In a crisis,
economic conditions worsen, businesses struggle, and individuals face

12. financial hardships, leading to increased loan defaults and a decline in asset
values. This deterioration can erode the bank's capital base and impair its
ability to absorb losses, ultimately leading to collapse.
2. Liquidity Issues: Liquidity refers to a bank's ability to meet its short-term
obligations. During a financial crisis, banks may face severe liquidity
problems as confidence in the financial system wanes, and depositors and
creditors rush to withdraw their funds. If a bank cannot access sufficient funds
to meet these withdrawals or obtain necessary short-term financing, it may
become illiquid and unable to continue normal operations. This liquidity
crunch can ultimately lead to the collapse of the bank.
3. Excessive Leverage: Banks often rely on borrowed funds to finance their
operations and investments. Excessive leverage, or high levels of debt relative
to the bank's capital, can amplify the risks and potential losses during a
financial crisis. When market conditions worsen, assets decline in value, and
funding becomes scarce, highly leveraged banks are more vulnerable to
insolvency. The inability to service their debt obligations can result in bank
failures.
4. Contagion and Interconnectedness: Financial crises tend to have a domino
effect, where the collapse of one bank can trigger a chain reaction of failures.
This contagion effect occurs due to the interconnectedness of the financial
system. Banks are often counterparties to each other's transactions, and a
collapse of confidence in one institution can lead to a loss of trust in others.
As a result, depositors and creditors may rapidly withdraw funds from
multiple banks, leading to a systemic banking crisis.
5. Inadequate Risk Management and Governance: Weak risk management
practices and poor governance within banks can contribute to their collapse.
If banks have inadequate risk assessment, insufficient capital buffers, or
ineffective internal controls, they may not be able to identify and mitigate
risks effectively. Additionally, flawed corporate governance structures and
oversight can result in mismanagement and risky decision-making, further
exacerbating the bank's vulnerabilities.
6. Regulatory and Supervisory Failures: Financial crises often highlight
weaknesses in regulatory and supervisory frameworks. Inadequate
regulations, lax enforcement, or regulatory arbitrage can allow banks to take
excessive risks or engage in questionable practices. Regulatory failures can
undermine the stability of the banking system, as weak oversight may fail to
detect or address emerging risks in a timely manner, leading to bank collapses.
It's important to note that each financial crisis is unique, and the specific causes and
circumstances surrounding bank collapses can vary. However, the factors mentioned

13. above provide a general framework for understanding the vulnerabilities and risks
that can lead to the collapse of banks during a financial crisis.
2023 banking crisis
Over the course of five days in March 2023, three small- to mid-size U.S. banks
failed, triggering a sharp decline in global bank stock prices and swift response by
regulators to prevent potential global contagion. Silvergate Bank and Signature
Bank, both with significant exposure to cryptocurrency, failed in the midst
of turbulence in that market. Silicon Valley Bank (SVB) failed when a bank run was
triggered after it sold its Treasury bond portfolio at a large loss, causing depositor
concerns about the bank's liquidity. The bonds had lost significant value as market
interest rates rose after the bank had shifted its portfolio to longer-maturity bonds.
The bank's clientele was primarily technology companies and wealthy individuals
holding large deposits, but balances exceeding $250,000 were not insured by
the Federal Deposit Insurance Corporation (FDIC).
In response to the bank failures, the three major U.S. federal bank regulators
announced in a joint communiqué that extraordinary measures would be taken to
ensure that all deposits at Silicon Valley Bank and Signature Bank would be
honored.[1]
The Federal Reserve established a Bank Term Funding Program (BTFP)
to offer loans of up to one year to eligible depository institutions pledging qualifying
assets as collateral.[2][3]
To prevent the situation from affecting more banks, global industry regulators,
including the Federal Reserve, the Bank of Canada, Bank of England, Bank of
Japan, European Central Bank, and Swiss National Bank intervened to provide
extraordinary liquidity.[4][5][6]
Outside of the United States and other central banks,
attempts to calm the banking crisis came most notably from Switzerland, where on
March 19, Credit Suisse was acquired by rival UBS in a government-brokered deal
with an attempt to halt the banking crisis. UBS and the Swiss government were
praised for the deal, seen as a way to prevent Credit Suisse, itself considered
a systemically important financial institution, from collapsing and causing further
crisis within the banking system.[7][8]
By March 16, large interbank flows of funds were occurring to shore up bank
balance sheets and some analysts were talking of a possibly broader U.S. banking
crisis.[9]
The Federal Reserve discount window liquidity facility had experienced
approximately $150 billion in borrowing from various banks by March 16.[10]
Soon after the bank run at SVB, depositors quickly began withdrawing cash from
San Francisco-based First Republic Bank (FRB), which focused on private

14. banking to wealthy clientele. Like SVB, FRB had substantial uninsured deposits
exceeding $250,000; such deposits constituted 68% of the bank's total at year-end
2022, declining to 27% by the end of March, as $100 billion in uninsured deposits
were withdrawn. Despite a $30 billion capital infusion from a group of major banks
in March, FRB continued to destabilize and its stock price plummeted as the FDIC
prepared to take it into receivership and find a buyer on April 29.[7][8]
On May 1,
the FDIC announced that First Republic had been closed and sold to JPMorgan
Chase.[11][12]
United States[edit]
Further information: Cryptocurrency bubble § 2020–2022 cryptocurrency bubble,
and 2021–2023 inflation surge
Normal yield curve began inverting in July 2022, causing short-term Treasury rates
to exceed long-term rates
In the lead-up period, many banks within the United States had invested their
reserves in U.S. Treasury securities, which had been paying low interest rates for
several years. As the Federal Reserve began raising interest rates in 2022 in response
to the 2021–2023 inflation surge, bond prices declined, decreasing the market value
of bank capital reserves, causing some banks to incur unrealized losses; to maintain
liquidity, Silicon Valley Bank sold its bonds to realize steep losses.[9]
Also, several
banks gained market exposure to cryptocurrency and cryptocurrency-related firms
prior to and during the COVID-19 pandemic;[13]
the 2020–2022 cryptocurrency
bubble popped in late 2022.[14]
In this environment, three such banks failed or were
shut down by regulators: The first bank to fail, cryptocurrency-focused Silvergate
Bank, announced it would wind down on March 8, 2023 due to losses suffered in its
loan portfolio.[15][16]
Two days later, upon announcement of an attempt to raise
capital, a bank run occurred at Silicon Valley Bank, causing it to collapse and be
seized by regulators that day.[15]
Signature Bank, a bank that frequently did business
with cryptocurrency firms, was closed by regulators two days later on March 12,
with regulators citing systemic risks.[15][17][18]
The collapses of First Republic Bank,
Silicon Valley Bank and Signature Bank were the second-, third- and fourth-largest
bank failures in the history of the United States, respectively, smaller only than the
collapse of Washington Mutual during the 2007–2008 financial crisis.[19][failed
verification]

15. In 2019, the Federal Reserve's "Tailoring rules" changed, increasing minimum asset
threshold from $50 billion to $100 billion and reduced the number of required stress
testing scenarios, allowing banks with under $100 billion to have reduced liquidity
standards.[20]
Signature Bank and First Republic Bank were under the $100 billion
total assets for the Federal Reserve's tailoring rules, allowing the banks to have
reduced regulation for liquidity.[21][22][23]
Some have questioned if First Republic
Bank would had a bank run if there were similar regulation to EU countries in the
United States.[24]
Liquidation of Silvergate Bank[edit]
Further information: Silvergate Bank § Liquidation
Background[edit]
Silvergate Bank is a California-based bank that began operations in 1988 as
a savings and loan association. In the 2010s, the bank began to provide banking
services to players within the cryptocurrency market. The bank sought regulatory
approval in the summer of 2014 to do business with cryptocurrency firms. The bank
expanded the assets on its balance sheet significantly—doubling its assets in its 2017
fiscal year to $1.9 billion—by servicing cryptocurrency exchanges and other
companies who were involved in the cryptocurrency business that could not secure
financing from larger, more conservative banks. Despite its rapid growth, the
company maintained a small physical footprint; in 2018, the bank had only three
branches, all located in Southern California.[25]
By the fourth quarter of 2022, 90%
of the bank's deposits had become cryptocurrency-related, with over $1 billion in
deposits being tied to Sam Bankman-Fried.[26]
In addition to providing traditional banking services to its cryptocurrency clients, the
bank operated as a clearinghouse for its banking clients; it involved itself in the
business of resolving and settling transactions in real-time through its proprietary
Silvergate Exchange Network. The network allowed a client to send payments in
U.S. dollars from its accounts with Silvergate to those of another client of the bank
without requiring an interbank wire transfer. A large number of cryptocurrency
companies set up accounts with the bank to take advantage of Silvergate's relatively
quick transaction settling times.[25]
Silvergate stock price (2019–2023)
Despite conducting the majority of its business with cryptocurrency companies,
Silvergate's investment portfolio was fairly conservative; the company took large
positions in mortgage-backed securities as well as U.S. bonds.[27]
These sorts of

16. assets, while reliable to be paid-in-full through their maturity date, carry risks
associated with changes in interest rates; there is an inverse relationship between
the mark-to-market value of a bond and the bond's yield. As interest rates shot up
during the 2021–2023 inflation surge, the mark-to-market price of these securities
decreased significantly. When these losses are unrealized, this does not typically
cause the bank to cease operating, as the bank will receive payment-in-full under the
original terms of the bond. However, if forced to sell these securities at a lower mark-
to-market price, the losses on these types of assets become realized, posing
significant risks to the bank's ability to continue to operate.[27]
Events[edit]
Silvergate was hit with a bank run in the wake of the bankruptcy of FTX; deposits
from cryptocurrency-related firms dropped by 68% at the bank, with the bank facing
requests from its clients to withdraw upwards of $8 billion in deposits.[26]
As
Silvergate did not have enough cash-on-hand to satisfy the deposit withdrawals, the
bank began to sell its assets at a steep loss; the company realized a loss of $718
million on withdrawal-related asset sales in the fourth fiscal quarter of 2022
alone.[26][27][28]
The bank, in a public statement, said that it was solvent at the end of
Q4 2022, with an asset sheet containing assets of $4.6 billion in cash and $5.6 billion
in liquid debt securities, with $3.8 billion in deposit obligations.[26]
Silvergate faced
tight financial constraints in the coming months, selling assets at a loss and
borrowing $3.6 billion from the Federal Home Loan Bank of San Francisco to
maintain its liquidity.[29]
Silvergate wrote in a regulatory filing on March 1 that the
bank risked losing its status as a well-capitalized bank and that the bank faced risks
relating to its ability to continue operating.[16][30]
Facing continued losses from sales of securities at mark-to-market price, Silvergate
released a public notice on March 8, 2023, saying that it would undergo voluntary
liquidation and would return all deposited funds to their respective owners.[16][18][27]
Collapse of Silicon Valley Bank[edit]
Main article: Collapse of Silicon Valley Bank
Background[edit]
Silicon Valley Bank (SVB) was a commercial bank founded in 1983 and
headquartered in Santa Clara, California. Until its collapse, SVB was the 16th largest
bank in the United States and was heavily skewed toward serving companies and
individuals from the technology industry.[31][32][33]
Nearly half of U.S. venture
capital-backed healthcare and technology companies were financed by
SVB.[34]
Companies such as Airbnb, Cisco, Fitbit, Pinterest, and Block, Inc. have

17. been clients of the bank.[35]
In addition to financing venture-backed companies, SVB
was well known as a source of private banking, personal credit lines, and mortgages
to tech entrepreneurs.[36]
According to the FDIC, it had $209 billion in assets at the
end of 2022.[37]
Silicon Valley Bank recorded an increase of its deposit holdings during the COVID-
19 pandemic, when the tech sector experienced a period of growth. In 2021, it
purchased long-term Treasury bonds to capitalize on the increased deposits.
However, the current market value of these bonds decreased as the Federal
Reserve raised interest rates to curb the 2021–2023 inflation surge.[38]
Higher
interest rates also raised borrowing costs throughout the economy and some Silicon
Valley Bank clients started pulling money out to meet their liquidity needs.[39]
Events[edit]
To raise cash to pay withdrawals by its depositors, SVB announced on March 8 that
it had sold over US$21 billion worth of securities, borrowed US$15 billion, and
would hold an emergency sale of some of its treasury stock to raise US$2.25 billion.
The announcement, coupled with warnings from prominent Silicon Valley investors,
caused a bank run as customers withdrew funds totaling US$42 billion by the
following day.[39]
On March 10, 2023, as a result of the bank run, the California Department of
Financial Protection and Innovation (DFPI) seized SVB and placed it under the
receivership of the FDIC. The FDIC established a deposit insurance national bank,
the Deposit Insurance National Bank of Santa Clara, to service insured deposits and
announced that it would start paying dividends for uninsured deposits the following
week; the dividends were funded by proceeds from the sale of SVB assets. Some 89
percent of the bank's US$172 billion in deposit liabilities exceeded the maximum
insured by the FDIC.[40][41]
Two days after the failure, the FDIC received exceptional
authority from the Treasury and announced jointly with other agencies that all
depositors would have full access to their funds the next morning.[42][43]
An initial
auction of Silicon Valley Bank assets on the same day attracted a single
bid,[44]
after PNC Financial Services and RBC Bank backed away from making
offers.[45][46]
The FDIC rejected this offer and plans to hold a second auction to attract
bids from major banks, now that the bank's systemic risk designation allows the
FDIC to insure all deposits.[44]
The bank was later reopened as a newly
organized bridge bank, Silicon Valley Bridge Bank, N. A.[47]
On March 26, 2023, the FDIC announced that First Citizens BancShares would
acquire the commercial banking business of SVB.[48][49]
As part of the deal, First
Citizens brought around $56.5 billion in deposits and $72 billion of SVB's loans
discounted by $16.5 billion, while around $90 billion of SVB's securities continue

18. to remain in receivership.[50]
The FDIC received about $500 million-worth of equity
appreciation rights linked to First Citizens' shares.[51]
SVB's 17 branches reopened
under the First Citizens brand the next day, with all SVB depositors becoming
depositors of First Citizens. SVB Private was initially going to be auctioned
separately but First Citizens later acquired the business as well.[52]
Collapse of Signature Bank[edit]
Further information: Signature Bank § Collapse
Background[edit]
Signature Bank stock price (2006–2023)
Signature Bank was a New York City-based bank founded in 2001.[53]
The bank
began as a subsidiary of Bank Hapoalim that took on clients with assets of around
$250,000, lending to small businesses based in New York City and in
the surrounding metropolitan area.[54]
The bank provided financing within
the multifamily residential rental housing market in the New York metropolitan area
beginning in 2007,[55][56]
though it began to reduce its exposure to the market during
the 2010s.[57]
By 2019, just over four-tenths of the value of the bank's loans were
made to multifamily homeowners in the New York metropolitan area, comprising
$15.8 billion of the bank's then-$38.9 billion in net loans.[57][58]
Beginning in 2018, Signature Bank began to court customers in the cryptocurrency
industry, securing hires that were experienced in the area with the goal of moving
away from its dependence on real estate lending.[59]
The quantity of deposits held at
the bank expanded significantly, with deposits increasing from about $36.3 billion
at the end of the 2018 fiscal year to $104 billion by August 2022; that month, over
one-quarter of the bank's deposits held were those of cryptocurrency
companies.[58][59]
Its cryptocurrency-sector clients included large cryptocurrency
exchange operators, such as Celsius Network and Binance.[18][59]
By early 2023,
Signature Bank had become the second largest provider of banking services to the
cryptocurrency industry—second only to Silvergate Bank.[60]
In addition to providing traditional banking services to cryptocurrency clients,
Signature Bank opened a proprietary payment network for use among its
cryptocurrency clients. The payment network, Signet, had opened in 2019 for
approved clients, and allowed the real-time gross settlement of fund transfers
through the blockchain without third parties or transaction fees. By the conclusion
of 2020, Signature Bank had 740 clients using Signet.[61][62]
The network continued

19. to expand during the following years; both Coinbase and the TrueUSD dollar-
pegged stablecoin had become integrated with Signet in 2022 and 2021,
respectively.[63]
Events[edit]
Reporters ask questions to Signature Bank customers exiting a New York location.
As cryptocurrency prices dropped significantly in 2022, particularly so after the
collapse of cryptocurrency exchange FTX, depositors in Signature Bank began to
withdraw deposits in the tune of billions of dollars; by the end of 2022, deposits in
the bank totaled around $88.6 billion, down from $106.1 billion in deposits held at
the beginning of the year—a time when over one-quarter of deposits were held by
digital asset-related entities.[18][58]
Towards the end of 2022, Signature Bank cut
business ties with cryptocurrency exchange Binance, seeking to reduce the bank's
exposure to risk associated with the cryptocurrency market.[18]
According to
Signature Bank board member Barney Frank, Signature Bank was hit with a multi-
billion dollar bank run on Friday, March 10, with depositors expressing concern
about cryptocurrency-related risks affecting the bank.[18]
Investor confidence in the
bank was also badly shaken, and the bank's stock declined by 23% on that Friday—
the day on which Silicon Valley bank collapsed—marking the then-largest single-
day decline of the Signature Bank's value in its 22-year history.[64]
On March 12, 2023, two days after the collapse of Silicon Valley Bank, Signature
Bank was closed by regulators from the New York State Department of Financial
Services in what is the third-biggest banking collapse in U.S. history.[15][18]
The bank
proved unable to close a sale or otherwise bolster its finances before markets opened
on Monday morning in order to protect its assets after customers began withdrawing
their deposits in favor of bigger institutions,[18]
and shareholders of the bank lost all
invested funds.[65]
The bank was placed under receivership by the FDIC, which
immediately established Signature Bridge Bank, N.A. to operate its marketed assets
to bidders.[66]
Signature Bank had been under multiple federal investigations that were ongoing at
the time of the bank's collapse regarding the rigor of its anti-money
laundering measures. The U.S. Department of Justice had opened a criminal probe

20. into whether the firm was performing due diligence when opening up new accounts
and whether it was doing enough to detect and report potential criminal activity by
its clients. The U.S. Securities and Exchange Commission had opened a separate,
related civil probe.[67][68]
On March 19, the New York Community Bank (NYCB) agreed to purchase around
$38.4 billion in Signature's assets for $2.7 billion. Due to the deal, 40 Signature
branches were rebranded to Flagstar Bank, one of NYCB's subsidiaries.[69]
Collapse of First Republic Bank[edit]
Further information: First Republic Bank § Collapse
First Republic Bank Stock Price
Background[edit]
This section needs expansion with: a summary with a level
of detail about the general operations and history equivalent
to the other banks. You can help by adding to it. (May 2023)
The San Francisco-based First Republic Bank (FRB) was a commercial bank and
provider of wealth management services. It catered to high-net-worth
individuals and operated 93 offices in 11 states, primarily in New York, California,
Massachusetts, and Florida.[22]
It was the 14th largest U.S. bank at the end of
2022.[70]
Events[edit]
Intense scrutiny and pressure were applied to other U.S. banks, including
FRB.[71]
On March 13, its shares fell by 62%.[72]
As the bank faced significant
liquidity issues, on March 16, it received a $30 billion lifeline in the form of deposits
from a number of major U.S. banks, on top of a $70 billion financing facility
provided by JPMorgan Chase & Co.[73][74]
Eleven of the largest U.S. banks
participated in the rescue effort,[75]
under the direction of Jamie Dimon.[76]
On March 19, S&P Global downgraded the credit rating of First Republic Bank
further into junk by three notches saying that the private-sector rescue effort "may
not solve the substantial business, liquidity, funding, and profitability challenges that
we believe the bank is now likely facing."[77]
In its quarterly report in April, the bank
said that deposits had plunged by more than $100 billion. The announcement caused
the bank's share price to fall by more than 20%.[78]

21. On April 28, the bank announced plans to begin selling its bonds and securities at a
loss to raise equity and also begin laying off people.[79]
Multiple advisor teams began
to leave the bank as well.[80]
On that day, it was announced that the FDIC was
considering seizing the bank, causing its stock price to plunge another 43% to
$3.50.[79][81]
After falling another 42% in after hours trading, the FDIC confirmed its
imminent takeover of the bank.[82][83]
In 2023, the cumulative decrease in stock price
was 97%.[84]
The next day, the FDIC approached various banks, including JPMorgan
Chase, PNC and Bank of America, saying they had until April 30 to place bids for
First Republic Bank.[85]
On the morning of May 1, the California Department of Financial Protection and
Innovation announced that FRB had been closed, and its assets were sold to
JPMorgan for $10.6 billion.[86]
Federal response[edit]
Bank Term Funding Program[edit]
In response to the bank failures of March, the government took extraordinary
measures to mitigate fallout across the banking sector.[18]
On March 12, Federal
Reserve created the Bank Term Funding Program (BTFP), an emergency lending
program providing loans of up to one year in length to banks, savings
associations, credit unions, and other eligible depository institutions that
pledge U.S. Treasuries, agency debt and mortgage-backed securities, and other
qualifying assets as collateral.[2][3][87]
The program is designed to provide liquidity to
financial institutions, following the collapse of Silicon Valley Bank and other bank
failures, and to reduce the risks associated with current unrealized losses in the U.S.
banking system that totaled over $600 billion at the time of the program's
launch.[88]
Funded through the Deposit Insurance Fund,[89]
the program offers loans
of up to one year to eligible borrowers who pledge as collateral certain types
of securities including U.S. Treasuries, agency debt, and mortgage-backed
securities.[90]
The collateral will be valued at par instead of open-market value, so a
bank can borrow on asset values that have not been impaired by a series of interest
rate hikes since 2022. The Federal Reserve also eased conditions at its discount
window. The Department of the Treasury will make available up to $25 billion from
its Exchange Stabilization Fund as a backstop for the program.[91]
In addition to working with their counterparts at the FDIC and U.S. Treasury to
provide liquidity to banks through the BTFP, the Federal Reserve has begun to
internally discuss implementing stricter capital reserve and liquidity requirements
for banks with between $100 billion and $250 billion in assets on their balance
sheets.[92]
A review of regulations affecting regional banks has been ongoing since
2022, as Federal Reserve vice chairman Michael Barr and other officials in

22. the Biden Administration had become increasingly concerned about the risk posed
to the financial system by the rapidly increasing size of regional banks.[92][93]
U.S. investigations[edit]
The collapse of Silicon Valley Bank itself has also spurred federal investigations
from the U.S. Securities and Exchange Commission as well as the United States
Department of Justice. Within the scope of both probes is the sales of stock made by
senior officers of Silicon Valley Bank shortly before the bank failed, while the SEC's
investigation also includes a review of past financial- and other risk-related
disclosures made by Silicon Valley Bank to evaluate their accuracy and
completeness.[94]
Aftermath of bank failures[edit]
As depositors began to move money en masse from smaller banks to larger
banks,[18][71]
on Monday, March 13, shares of regional banks fell.[72]
Bitcoin price
Following SVB and Signature's collapses, Western Alliance Bancorporation share
price fell 47% and PacWest Bancorp was down 21% recovering after their trading
was halted.[95][96]
Moody's downgraded its outlook on the U.S. banking system to
negative, citing what it described as "rapid deterioration" of the sector's financial
footing.[97]
It also downgraded the credit ratings of several regional banks, including
Western Alliance, First Republic, Intrust Bank, Comerica, UMB Financial
Corporation, and Zions Bancorporation.[98]
Large declines in regional bank stocks
continued after First Republic's failure.[99]
U.S. President Joe Biden made a statement about the first three bank failures on
March 13, and asserted that government intervention was not a bailout and that the
banking system was stable.[100][101]
The initial bank failures led to speculation on 13 March that the Federal Reserve
could pause or halt rate hikes.[102]
Beginning on March 13, traders began modifying
their strategies in the expectation that fewer hikes than previously expected will
occur.[103]
Some financial experts suggested that the BTFP, combined with a recent
practice of finding buyers who would cover all deposits, may have effectively
removed the FDIC's $250,000 deposit insurance limit.[104]
However, Treasury
Secretary Janet Yellen clarified that any guarantee beyond that limit would need the
approval of the Biden administration and Federal regulators.[105]
The initial three bank failures and resulting pressures on other U.S. regional banks
were expected to reduce available financing in the commercial real estate market
and further slow commercial property development.[106]
The Federal Reserve's

23. discount window liquidity facility saw around $150 billion in borrowing from
various banks by March 16,[10]
more than 12 times the $12 billion that the BTFP
provided.[107]
Since the majority of First Republic's long term assets were
in municipal bonds, it was unable to make full use of the BTFP as those assets did
not qualify as an eligible collateral.[108]
By 16 March, large inter-bank flows of funds were occurring to shore up bank
balance sheets and numerous analysts were reporting on a more general
U.S. banking crisis. Many banks had invested their reserves in U.S. Treasury
securities, which had been paying low interest rates. As the Federal Reserve began
raising rates in 2022, bond prices declined decreasing the market value of bank
capital reserves, leading some banks to sell the bonds at steep losses as yields on
new bonds were much higher.[9]
The Federal Reserve's discount window liquidity
facility had experienced approximately $150 billion in borrowing from various
banks by March 16.[10]
On 17 March, President Biden stated that the banking crisis had calmed
down,[109]
while the New York Times said that the March banking crisis was hanging
over the economy and had rekindled fear of recession as business borrowing would
become more difficult as many regional and community banks would have to reduce
lending.[110][111]
Late on Sunday, the Federal Reserve and several other central banks announced
significant USD liquidity measures in order to calm market turmoil.[112]
In a
"coordinated action to enhance the provision of liquidity through the standing U.S.
dollar swap line arrangements", the U.S. Federal Reserve, the Bank of Canada, Bank
of Japan, European Central Bank, and Swiss National Bank joined together to
organize daily U.S. dollar swap operations. These swaps had previously been set up
to occur on a weekly cadence.[113]
The share price of PacWest had fallen sharply on 3 May after the bank announced
that it was 'considering strategic options including a sale'. On 4 May share trading
was suspended as the sell-off marked a further 42% loss with other US regional
banks, including First Horizon, Metropolitan Bank and Western Alliance, also being
affected.[114][115]
In May 2023, FDIC proposed imposing higher fees on an estimated 113 of the largest
banks to cover the costs of bailing out uninsured depositors.[116]
International impact[edit]
By Sunday, 19 March, concerns about the banking sector internationally had
increased.[4][5][6][117][118]
That day, Swiss bank UBS Group AG bought its smaller
competitor Credit Suisse in an emergency arrangement brokered by the Swiss

24. government. One month before the events in the United States, Credit Suisse
announced its largest annual loss since the 2008 financial crisis, as clients continued
withdrawing their cash at a rapid pace; $147 billion had been withdrawn in the fourth
quarter of 2022. It also disclosed it had found "material weaknesses" in its financial
reporting. Its largest investor, Saudi National Bank, announced on March 15 that it
would not provide more support to Credit Suisse. Its share price plunged 25% on the
news and UBS stepped in to buy the bank. Axel Lehmann, former chairman of the
bank, later sought to blame the American bank failures for triggering Credit Suisse's
demise, though other analysts disputed that characterization. The bank had
experienced many years of multi-billion dollar losses, scandals, executive turnover
and weak business strategy.[119]
Late on Sunday the Federal Reserve and several other central banks announced
significant USD liquidity measures in order to calm market turmoil.[117]
In a
"coordinated action to enhance the provision of liquidity through the standing U.S.
dollar swap line arrangements", the U.S. Federal Reserve, the Bank of Canada, Bank
of Japan, European Central Bank (ECB) and Swiss National Bank joined together to
organize daily U.S. dollar swap operations. These swaps had previously been set up
to occur on a weekly cadence.[113]
On 21 March, The Business Times reported that Asian central banks were "unlikely
to be greatly influenced by the banking crisis in the United States and
Europe",[120]
but Australia's central bank governors met and publicly indicated a
potential pause in recent rate hikes. ABC News reported that the challenge for central
banks is determining if the "banking turmoil close to crashing the real economy, or
is inflation still the greater threat."[121]
In Japan the three main lenders, Mitsubishi
UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial
Group, lost share value between 10% and 12% due to the market turmoil and their
exposure to the bond market.[122]
Japan's central bank held a crisis meeting in mid-
March while the Topix banks index fell 17%. The fall was led by fears over the SVB
collapse and the risks in Japan's regional banking sector, partly because of exposure
to US interest rate hikes.[123]
The cost to insure against default on Deutsche Bank debt rose substantially on
Friday, 24 March, with the 5-year CDS for the bank's debt rising 70%.[124]
The ECB
and other European central banks raised interest rates the same day.[125]
The
European STOXX 600 index fell around 4% with shares in Deutsche Bank down
more than 14% at one point, closing the day at a loss of around 8%.[126]
The UK's
banking index also fell around 3% led by falls of around 6% for
both Barclays and Standard Chartered and a 4% drop for NatWest. Shares in other
European banks also fell, among them Commerzbank, Austria's Raiffeisen
Bank and the French Société Générale.[127][128][129]
According to the European

25. Commission's Paolo Gentiloni, finance ministers in the Euro zone called on the
Commission to close loopholes in Crisis Management and Deposit Insurance
(CMDI) provision, starting in the second quarter of 2023.[130]
Chinese banks experienced little negative effect. According to Bloomberg News,
almost all of the 166 top performers during the market turmoil were in China. The
banking crisis in the U.S. and Europe highlighted the relative stability of the Chinese
banking system. While China's recovery from the pandemic remains fragile,
inflation there is muted, and the People's Bank of China had adjusted interest rates
at a slower pace than Western central banks.[131]
The turbulence in the financial system caused India's central bank to put any further
hikes in interest rate on hold on 6 April, with governor Shaktikanta Das saying "it's
a pause not a pivot". A 25 basis point increase had been widely expected. Central
banks in Australia, Canada and Indonesia also paused any further increases.[132]
While rising interest rates give banks greater returns on customer's loans, the tighter
financial conditions meant the sector saw a downturn in equity funding, with the
S&P 500 bank index (SPXBK) in April down 14% year to date on expectation of
lower quarterly earnings for some US banks.[133]
On 11 April the International
Monetary Fund downgraded its forecast for GDP growth globally in 2023 from 2.9%
to 2.8%, saying "Uncertainty is high and the balance of risks has shifted firmly to
the downside so long as the financial sector remains unsettled". The forecast marked
a slowdown from 3.4% in 2022, but predicted growth could rise modestly to 3.0%
in 2024.[134]
The IMF had been cutting its forecast since spring 2022.[135][136]
Bank crisis:
The banking crisis described in your statement has significant implications for the US, global, and
Vietnam economies. Let's examine the effects on each and discuss potential actions the Federal
Reserve (Fed) and government could take.
1. Effects on the US Economy:
a. Financial Stability: The bank failures and subsequent turmoil led to a decline in bank stock
prices, increased borrowing from the Federal Reserve discount window, and concerns about the
stability of the banking system. This instability can affect consumer and investor confidence,
potentially leading to reduced lending, investment, and economic activity.
b. Credit Availability: The crisis may result in a reduction in available financing, particularly in
the commercial real estate market. Regional and community banks, facing pressures and potential
losses, may be compelled to reduce lending, impacting businesses and individuals reliant on
credit.
c. Regulatory Response: The government and regulatory bodies, including the Fed and FDIC,
responded by implementing measures to restore confidence and stability. The Bank Term
Funding Program (BTFP) was established to provide emergency loans to eligible depository

26. institutions. Stricter capital reserve and liquidity requirements for banks with assets between $100
billion and $250 billion are also being considered.
2. Effects on the Global Economy:
a. Contagion Risks: The failures of US banks and the subsequent market turbulence triggered
concerns about global contagion. As seen in the case of Credit Suisse, international banks can
face significant challenges and require government intervention to prevent further crisis. The
coordinated actions of central banks aimed to enhance liquidity provision and stabilize the
international financial system.
b. Market Volatility: The banking crisis led to stock market declines, particularly impacting
financial institutions. Moody's downgraded the outlook on the US banking system, and credit
ratings for several regional banks were lowered. The global banking turmoil, along with other
factors, could rekindle fears of a potential recession and impact business borrowing and lending
worldwide.
3. Effects on the Vietnam Economy:
a. Investor Confidence: The banking crisis and its global repercussions can affect investor
sentiment and confidence in the financial system, potentially leading to a decline in foreign
investments.
b. Economic Outlook: The turmoil in the US and global financial sectors can have spillover
effects on the Vietnamese economy, particularly through trade and investment channels. If global
economic growth slows or financial instability persists, it can impact Vietnam's export-oriented
industries and overall economic outlook.
Actions by the Fed and Government:
1. Bank Term Funding Program (BTFP): The Federal Reserve established the BTFP, an
emergency lending program that offered loans of up to one year to eligible depository institutions.
Banks, savings associations, credit unions, and other qualified institutions could pledge qualifying
assets such as U.S. Treasuries, agency debt, and mortgage-backed securities as collateral to access
funding. The program aimed to provide liquidity to financial institutions and mitigate the risks
associated with unrealized losses in the banking system.
2. Discount window liquidity facility: The Federal Reserve eased conditions at its discount window,
which is a lending facility for banks to borrow funds from the central bank. During the banking
crisis, various banks borrowed approximately $150 billion from the discount window to shore up
their balance sheets and address liquidity concerns.
3. Stricter capital reserve and liquidity requirements: The Federal Reserve internally discussed
implementing stricter capital reserve and liquidity requirements for banks with assets between $100
billion and $250 billion. This review of regulations aimed to enhance the stability and resilience of
regional banks and mitigate risks to the financial system.
4. Coordinated global liquidity measures: The Federal Reserve, along with other major central
banks including the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, and
Swiss National Bank, intervened to provide extraordinary liquidity measures. These central banks
organized daily U.S. dollar swap operations to enhance the provision of liquidity through existing
swap line arrangements.
The effects of these Fed actions were aimed at stabilizing the banking system, mitigating the risks of further
bank failures, and restoring confidence in the financial markets. Here are some of the effects:
1. Liquidity provision: The Fed's actions through the BTFP and discount window facility provided
financial institutions with access to much-needed liquidity. This helped alleviate immediate
funding pressures and prevented potential bank runs.

27. 2. Deposit safety: The joint communiqué by the federal bank regulators, including the FDIC, assured
depositors that all deposits at Silicon Valley Bank and Signature Bank would be honored. This
reassurance aimed to prevent a loss of confidence in the banking system and a widespread
withdrawal of deposits.
3. Market stabilization: The coordinated global liquidity measures provided by central banks helped
calm market turmoil and prevent further disruptions in the financial system. These measures aimed
to restore stability and confidence in the markets, reducing the negative impact on stock prices and
preventing a broader financial crisis.
4. Regulatory improvements: The discussions around implementing stricter capital reserve and
liquidity requirements for regional banks signaled a commitment to strengthening the banking
sector's resilience. These potential regulatory improvements aimed to mitigate future risks and
enhance the overall stability of the financial system.
It's important to note that the specific effects on the U.S., world, and Vietnam economies would depend on
various factors, including the severity of the banking crisis, the overall health of the economies, and the
effectiveness of the measures taken. However, the actions of the Federal Reserve and other central banks
were intended to restore stability, prevent systemic risks, and support economic recovery.
Câu 4: Why does inflation rise, the state must increase interest rates, reduce the
Money Supply? Or during the pandemic, what was monetary policy like? Why
increase the money supply, reduce interest? How will rising / falling interest
rates affect the economy?
Inflation typically rises when there is an excess of money in the economy chasing
the limited supply of goods and services. To control inflation, central banks may
implement monetary policy measures, such as increasing interest rates and
reducing the money supply. However, during the pandemic, the monetary policy
response was different due to the unique circumstances. Let's explore these
concepts in more detail:
1. Controlling Inflation: When inflation rises, central banks often increase
interest rates and reduce the money supply to curb excessive spending and
dampen price pressures. Increasing interest rates makes borrowing more
expensive, reducing consumer and business spending, thereby slowing down
economic activity. Simultaneously, reducing the money supply limits the
availability of funds in the economy, further curbing spending.
2. Monetary Policy during the Pandemic: During the COVID-19 pandemic,
many countries implemented expansionary monetary policies to counteract
the severe economic contraction. The primary aim was to support businesses
and households by injecting liquidity into the economy and lowering
borrowing costs. Central banks reduced interest rates to near-zero levels or
implemented unconventional measures like quantitative easing (QE) to

28. increase the money supply. These actions were taken to stimulate economic
activity, boost lending, and prevent a deep and prolonged recession.
3. Increasing Money Supply and Reducing Interest Rates: During the
pandemic, increasing the money supply and reducing interest rates were part
of the expansionary monetary policy response. By increasing the money
supply, central banks aimed to provide liquidity to financial markets, support
lending, and ensure the availability of funds for businesses and households.
Lowering interest rates made borrowing cheaper, incentivizing investment,
consumption, and lending activities, which were crucial during the economic
downturn.
4. Impact of Rising/Falling Interest Rates on the Economy: Rising or falling
interest rates can have various effects on the economy:
 Rising Interest Rates: Increasing interest rates can have a cooling effect on
the economy. It makes borrowing more expensive, reducing consumer
spending and business investment. Higher borrowing costs can lead to a
slowdown in economic activity, including housing markets, as mortgage
rates rise. Rising interest rates can also attract foreign investors seeking
higher returns on their investments, potentially appreciating the currency.
 Falling Interest Rates: Lowering interest rates can stimulate economic
growth. It reduces borrowing costs, encouraging consumer spending,
business investment, and borrowing. Lower rates make housing more
affordable, leading to increased demand in the real estate sector.
Additionally, lower interest rates can devalue a currency, making exports
more competitive in international markets.
It's important to note that the impact of interest rates on the economy is not always
immediate or uniform across all sectors. Other factors, such as fiscal policies,
market conditions, and global economic dynamics, also influence the overall
economic outcomes.
Some Moneytary policy during Pandemic:
During the pandemic, central banks pursued expansionary monetary policies to
mitigate the adverse effects of the crisis. However, as the situation evolves and
economic recovery progresses, central banks may gradually adjust their policies,
including increasing interest rates and reducing the money supply, to manage
inflationary pressures and ensure sustainable economic growth.
During the COVID-19 pandemic, central banks around the world implemented
various monetary policy measures to support their economies and mitigate the

29. impact of the crisis. Here are some common monetary policy actions taken during
the pandemic:
1. Interest Rate Reductions: Central banks lowered interest rates to historically
low levels to stimulate borrowing and spending. By reducing the cost of
borrowing, central banks aimed to encourage businesses and households to
continue investing, spending, and borrowing amidst the economic downturn.
In some cases, central banks even implemented negative interest rates to
further incentivize borrowing and discourage saving.
2. Quantitative Easing (QE): Many central banks implemented or expanded their
quantitative easing programs. QE involves the purchase of government bonds
or other assets by central banks from commercial banks and other financial
institutions. By injecting liquidity into the financial system, central banks
aimed to maintain market functioning, support lending, and prevent a credit
crunch.
3. Liquidity Provision: Central banks provided ample liquidity to financial
institutions to ensure the smooth functioning of financial markets. They
offered short-term loans and expanded their lending facilities to provide funds
to banks and other financial institutions, ensuring that credit remained
available and accessible during the crisis.
4. Credit and Loan Support: Central banks collaborated with governments to
implement credit and loan support programs. These programs aimed to
provide financial assistance and liquidity to businesses, particularly small and
medium-sized enterprises (SMEs), that were severely impacted by the
pandemic-induced economic disruptions. Central banks provided funds to
commercial banks at low interest rates, with conditions to encourage lending
to affected businesses.
5. Regulatory Flexibility: In response to the crisis, central banks temporarily
relaxed certain regulatory requirements to ease financial burdens on banks and
facilitate lending. They adjusted capital adequacy ratios, liquidity
requirements, and loan classification standards to provide banks with more
flexibility to support the economy. These measures aimed to ensure that banks
had sufficient capacity to provide loans and support businesses and
households.
6. Forward Guidance: Central banks provided forward guidance to communicate
their intentions regarding future monetary policy actions. They offered clarity
on their policy stance, interest rate expectations, and economic outlook.
Forward guidance aimed to provide stability, manage market expectations,
and guide businesses and investors in their decision-making.

30. It's important to note that the specific actions taken by central banks varied across
countries, reflecting their unique economic circumstances and policy frameworks.
The main objective of these measures was to mitigate the adverse effects of the
pandemic, support economic recovery, and maintain financial stability during a
period of significant uncertainty and disruption.
Câu 5: By 2014, China had accumulated $4 trillion in international reserves.
China’s rapid growth of productivity, accompanied by an inflation rate lower
than that of the U.S., caused the long-run value of the yuan to increase. The
Chinese central bank engaged in massive purchases of U.S. dollar assets to
maintain the fixed relationship between the Chinese yuan and the U.S. dollar.
How Did China Accumulate $4 Trillion of International Reserves?
China accumulated $4 trillion in international reserves primarily through its
persistent trade surpluses and capital inflows. Here are the key factors that
contributed to China's significant accumulation of international reserves:
1. Trade Surpluses: China has been running consistent trade surpluses for many
years, meaning its exports exceed its imports. This surplus generates a
substantial inflow of foreign currency, primarily in the form of U.S. dollars,
as the U.S. has been one of China's largest trading partners. To maintain the
fixed relationship between the yuan and the U.S. dollar, China's central
bank, the People's Bank of China (PBOC), purchases the excess U.S. dollars
by selling yuan and accumulates them as international reserves.
2. Foreign Direct Investment (FDI): China has attracted significant foreign
direct investment over the years. Foreign companies and investors have been
attracted to China's large and growing market, low labor costs, and favorable
investment climate. These inflows of foreign capital also contribute to the
accumulation of international reserves as the PBOC converts the incoming
foreign currency into yuan to maintain the fixed exchange rate.
3. Capital Inflows and Investment Flows: China has experienced substantial
capital inflows from various sources, including portfolio investments,
foreign institutional investors, and foreign banks. These inflows occur when
foreign entities invest in Chinese stocks, bonds, or other financial assets. The
PBOC accumulates the foreign currency received from these investments as
international reserves.
4. Foreign Exchange Intervention: To maintain the fixed exchange rate
between the yuan and the U.S. dollar, the PBOC actively intervenes in the
foreign exchange market. It buys excess U.S. dollars and sells yuan,

31. increasing its foreign currency reserves. By intervening in the foreign
exchange market, the PBOC aims to stabilize the yuan's value and avoid
significant fluctuations.
5. Export-Oriented Economy: China has been known for its export-oriented
economy, with a strong emphasis on manufacturing and exporting a wide
range of goods and products. This export focus, along with competitive
pricing and global demand for Chinese goods, has contributed to China's
consistent trade surpluses and the resulting accumulation of international
reserves.
It's important to note that China's large accumulation of international reserves has
implications for its economic policies and global economic dynamics. It provides
China with significant financial resources and a level of stability in its foreign
exchange reserves. However, it can also create challenges, such as concerns about
exchange rate management, trade imbalances, and potential disruptions in global
financial markets.
Câu 6: Why in 2022: Vietnam has a tightening policy: selling off foreign
exchange reserves? Increase the exchange rate trading spread? Interest rate
hikes? By 2023 easing: buying back foreign exchange reserves, April reducing
operating rates?
The specific policies and actions undertaken by a country's central bank, such as
Vietnam's State Bank of Vietnam (SBV), can be influenced by various factors and
objectives. While I don't have access to the latest specific data and developments in
2022 and 2023, I can provide a general understanding of the measures you
mentioned based on economic principles and common policy tools. Please note
that the actual policy decisions in Vietnam may vary based on the prevailing
economic conditions and goals of the SBV.
1. Tightening Policy in 2022: a. Selling off foreign exchange reserves: Selling
off foreign exchange reserves is typically done to stabilize the domestic
currency in the foreign exchange market. If the Vietnamese dong was facing
significant depreciation or speculative pressures, the SBV may have sold
foreign exchange reserves to intervene in the market and support the
currency's value.
b. Increase in exchange rate trading spread: The exchange rate trading spread refers
to the difference between the buying and selling prices of foreign currencies in the

32. market. Widening the trading spread can discourage excessive currency
speculation and promote stability. This measure may have been implemented to
manage volatility and discourage short-term speculative activities in the foreign
exchange market.
c. Interest rate hikes: Increasing interest rates is a common tool used by central
banks to curb inflationary pressures and attract capital inflows. If Vietnam was
experiencing high inflation or capital outflows, raising interest rates could help
stabilize prices and strengthen the attractiveness of domestic currency assets. It
could also encourage capital inflows, which can support the currency and the
overall economy.
2. Easing Policy in 2023: a. Buying back foreign exchange reserves: Buying
back foreign exchange reserves indicates a shift in policy to increase the
stock of reserves. This action may have been taken to rebuild the country's
foreign exchange buffers, enhance confidence in the currency, and provide a
cushion against potential external shocks.
b. Reducing operating rates: Reducing operating rates refers to the adjustment of
key policy rates set by the central bank. Lowering these rates can stimulate
economic activity by making borrowing cheaper and encouraging investment and
consumption. This measure may have been implemented to support economic
growth, especially if there was a need for a boost after a period of tightening
policies.
It's important to note that the specific policy decisions and their timing are
influenced by a wide range of economic factors, including inflation levels,
exchange rate stability, economic growth, capital flows, and external trade
dynamics. The central bank's actions are aimed at achieving macroeconomic
stability and promoting sustainable economic development in the country.