Silicon Valley Bank with assets over $270 trillion has filed for bankruptcy, just two days after rumors of a crisis emerged.
The global financial markets are now in turmoil.
Washington correspondent Nam Seung-mo reports on the impact this will have on us.
Customers of the Silicon Valley Bank, which has played a vital role in funding start-ups in the United States, are in shock following the sudden bankruptcy news.
The primary cause of the bank’s collapse was the sudden increase in interest rates by the US Federal Reserve.
The bank was forced to sell off its assets at a loss due to the sharp drop in the value of the bank’s holdings.
This news, coupled with rumors of a crisis, caused a stock market crash and mass withdrawals.
With total assets of $209 billion (approximately ₩276 trillion) the bank is the 16th largest in the US but is now the second-largest bankruptcy in history.
The New York Stock Exchange has plummeted, and Asian stock markets are also in turmoil after learning of the loss of $52 billion in market capitalization of the top four US banks.
US financial authorities have acted swiftly in response to the bankruptcy.
However, it is unlikely that interest rates will decrease in the near future.
The key issue now is the anxiety felt by investors and customers.
If the US government cannot reassure them, a massive withdrawal of funds from major banks could occur, leading to another financial crisis.
The South Korean financial authorities should also pay close attention to this situation.
This is Kim Hyun-woo reporting from Washington for SBS News.