How Silicon Valley Bank’s Collapse Could Trigger a Global Financial Meltdown | Explained
2Silicon Valley Bank (SVB) was founded in 1983 and grew to become one of the most influential banks in the US, especially in the tech sector. SVB had over $100 billion in assets and more than 30,000 clients, including some of the biggest names in Silicon Valley such as Airbnb, Uber, Stripe, and Coinbase. However, on Friday, March 10th 2023, SVB announced that it was unable to meet its obligations and filed for bankruptcy protection. This triggered a massive panic among its depositors who rushed to withdraw their money from SVB accounts. The bank was unable to cope with this sudden demand and ran out of cash within hours. The Federal Deposit Insurance Corporation (FDIC) stepped in to take over SVB’s operations and assets but could not guarantee full reimbursement for all depositors.
The collapse of SVB sent shockwaves across the financial system and the tech industry. Many companies that depended on SVB for their payroll, loans, investments, and other banking services found themselves in a dire situation. Some had to halt their operations temporarily or permanently while others scrambled to find alternative sources of funding or banking partners. The failure of SVB also raised questions about the stability and regulation of other banks that catered to tech startups and whether they could face similar risks.
In this video, we will dive deeper into what caused SVB’s downfall, how it impacted its clients and partners, and what it means for the future of banking and innovation in Silicon Valley.
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