The Ripple Effect of Silicon Valley Bank's Collapse on Emerging Markets
The Biden administration and the Federal Reserve were initially unsure about the need for explicit rescue of Silicon Valley Bank's depositors before markets opened on Monday morning. However, after signs of nascent bank runs across the country and direct appeals from small businesses and lawmakers from both parties, they quickly changed their minds. The government ensured that all depositors would be repaid in full, and the Fed offered a program providing attractive loans to other financial institutions in hopes of avoiding a cascading series of bank failures. The rescue had limits, ensuring that businesses around the country would be able to pay their employees on Monday and that no taxpayer money would be used by tapping the F.D.I.C.’s Deposit Insurance Fund.
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