The regulator closed the Signature Bank focusing on cryptocurrency business to avoid the spread of the crisis

It is reported that the New York State financial regulator closed Signature Bank on Sunday to prevent the crisis caused by the collapse of Silicon Valley banks from spreading to other banks. The United States Treasury Department, the Federal Reserve and the Federal Insurance Depository Corporation issued a joint statement on Sunday that the depositors of this New York-based bank will be able to withdraw all funds, which is the same as the situation that allows depositors of Silicon Valley banks to withdraw deposits on Monday, and is an exception to similar systemic risks.

Interpretation of this information:

The news reports that there is a state financial regulator in New York that has closed Signature Bank to prevent the crisis caused by the collapse of Silicon Valley banks from spreading to other banks. This move was taken in response to the rising concern about the potential systemic risk of bank failures that can lead to a financial crisis.

The regulatory authorities in the United States, including the Treasury Department, the Federal Reserve, and the Federal Insurance Depository Corporation, issued a joint statement stating that depositors of this New York-based bank would be allowed to withdraw all funds. This move is in line with the situation that occurred with Silicon Valley banks, and it aims to mitigate the potential systemic risk posed by bank failures.

The systemic risk in the banking sector arises when a failure of one bank threatens to trigger the failure of many other banks, leading to a financial crisis. This risk can arise due to a common exposure to a particular sector or asset class, such as the technology sector in the case of Silicon Valley banks. When banks fail, depositors may lose their deposits, which can lead to a loss of confidence in the banking system and trigger a financial crisis.

In the current situation, regulatory authorities have taken proactive measures to prevent the spread of the crisis caused by the collapse of Silicon Valley banks to other banks by closing Signature Bank. The move to allow depositors of both Signature Bank and Silicon Valley banks to withdraw all their funds is a crucial step in maintaining public confidence in the banking system and mitigating the systemic risk posed by bank failures.

In summary, the three keywords that encapsulate the message are: systemic risk, banking crisis, and proactive measures. The closure of Signature Bank to prevent the spread of the banking crisis and the decision to allow depositors to withdraw all their funds is a proactive measure to mitigate systemic risk in the banking sector. The joint statement issued by regulatory authorities underscores the need for coordinated action to restore public confidence in the financial system during times of crisis.