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The banking sector was on the brink of chaos, a Harvard professor observed


Kenneth Rogoff, a Harvard professor and former chief economist at the IMF, believes that chaos in the banking sector was inevitable due to the strategy of banks that bet that the period of cheap credit would continue for many years. The market has been enjoying ultra-low interest rates for several years, and this should have led to turmoil in the banking sector long before SVB collapsed in early March. But it's not just about SVB: any investment strategy that includes illiquid assets can lead to a loss of money anywhere in the world, including Japan or Italy. Banks managed risk and invested at low rates for more than 10 years, which for a long time brought good returns. However, with rate hikes by the Fed and other central banks, banks are having to adapt to a very different economic environment.

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Forex Award | World Forex Award | Forex
Forex Award | World Forex Award | Forex
Forex Award | World Forex Award | Forex
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