Liquidity risk review time

It is too early to tell whether this is just a mini banking crisis or the start of something more serious. But weaknesses in the banking system are being exposed following recent interest rate hikes and the ending of QE. Could the fund industry get caught up in this?

Silicon Valley Bank, Credit Suisse, First Republic Bank etc operated in very different areas of the market. Recent events show that when trouble occurs at one banking institution it can quickly spread to others, including those with no connection to the bank that first finds itself in difficulty. When destabilising and unexpected events occur in any financial sector it is impossible to know where or how it will end. It might be that the current problems that have come to light in the banking sector are quickly sorted out and life returns to normal. On the other hand, we might be on the eve of a financial crisis to match – or surpass - 2008.

To read more on this story see the March issue of The NED