The global banking industry crisis

The world that runs on money, banks are the engines that power the economy forward. When they fail, the whole financial system can come to a halt. No matter what the Fed chooses, the common man is going to feel the pinch in their pockets.

Experts predict Indian markets will be range-bound but don't rule out the possibility of a 15% fall in the event of a global selloff. It is advised to stick to domestics now, in what appears to be a “stock-picker’s” market.

After three major US banks failed- Silvergate bank, Silicon Valley Bank and Signature Bank. One had to be rescued by the First Republic. This ultimately led to the fall of Credit Suisse, one of the world's biggest banks. It ultimately had to merge with UBS. When banks fail, the economy is always in trouble. It is a warning sign of the impact of the US banking crisis on the economy.

Silvergate Bank is a publicly traded bank based in California that primarily serves the digital currency industry. The bank has been involved in providing services to cryptocurrency companies and investors which has led to its growth in recent years. However with any financial institution, there are always potential risks and challenges that could arise.

Republic Bank primarily serves high net worth individuals and businesses. It has lost 89 percent of its stock market value this year as customers pulled their money, pressuring the bank to sell assets that had declined in value amid interest-rate hikes

The string of US bank failures and very recently the Credit Suisse debacle may just be the tip of the iceberg. There could be more trouble in store for the global financial system. Terming the banking collapse a regulatory failure, the market expert says ending the great moderation era within a span of 12 months and raising rates rapidly, without a thought for banking balance sheets, has come back to haunt the global central banks.

As far as Indian markets are concerned, experts advise caution amid global risks and continued selling by foreign investors. It is good that the government and the regulators have stepped in. So it is all about fragility, which is inherent in global banking. And this we are talking about banking.

So just wait and watch, be cautious for now and let this banking mayhem in the US play out fully.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA