We should be worried about banking collapse contagion

Let us start with the good news. It is that this time there is no messing about, no waiting the authorities and rival banks have got together and moved impressively quickly. So, in rapid fashion, we’ve seen Silicon Valley Bank, Signature, Credit Suisse and First Republic all subjected to rescues and bailouts.

- CHRIS BLACKHURST

Silicon Valley Bank or SVB has been saved in the UK by HSBC; in the US, the Federal Reserve reacted swiftly to guarantee all deposits. Credit Suisse has received a Swiss government lifesaving injection; First Republic is saved, for now, by a group led by Bank of America, Goldman Sachs and JP Morgan depositing $30bn.

Compared to 2008, everyone involved is acting quicker and more decisively. There's no room for delay - this is an emergency, we must stop this bank from going under and wiping out its customers. And we must prevent the toppling of other banks. In that sense, a lesson from the last crisis has been absorbed. The banking industry and governments are anxiously trying to curb contagion. It's like trying to put out forest fires; hurling everything possible at the first sign of smoke.

Unfortunately, in a wildfire, every so often there is a disaster it's spotted too late, takes hold and no amount of water will succeed in dampening the flames. That's where we are in 2023, some 15 years after the world was subjected to a banking crisis.

We remember how close we came, how near other banks were to being caught in the contagion from one bank collapse causing another to fall.