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Review of the Week

Strong gains for Europe’s banks last week were reversed by Friday’s close. With the fear bug spreading, can we be confident it won’t strike again?

Last week ended on an unnerving note. Peak panic in the health of the global banking system seemed to be easing after the collapse of three regional banks in the US and the forced takeover of Swiss banking giant Credit Suisse.

But, on Friday, Europe’s banks took a further pounding, with Deutsche Bank (Germany’s biggest… Continue reading

Banks are very powerful, but very fragile. That’s because they are dependent on people and their ability to believe.

Banking is a confidence game. That doesn’t mean it’s a con, or duplicitous to its core, as some conspiracists argue. Magic is also a confidence trick. It draws you in and allows the impossible to become real: it creates something out
of nothing.

Banking is a sort of magic too, except it’s usually as dull
as bricks. Banking draws in millions… Continue reading

When banks fail they do so suddenly and the shock can create panic that spreads trouble to other lenders. That’s why US regulators have stepped in swiftly and unambiguously.

Silicon Valley Bank was taken over by regulators last week in the second-largest bank failure in American history.

The lender had $212 billion of assets at the end of 2022, making it the 16th largest bank in the US. It had a handful of offices in other countries as well, including… Continue reading

UK central bankers fall into an age-old parenting trap while talking to investors. Also, we look at the differences between official statistics and new ‘real-time’ series.
Central banking can be a lot like parenting. You’re the authority figure, you tend to do a lot of explaining and the listeners often don’t like what they hear.
It’s a classic: Little Timmy doesn’t like the answer he got from Mum about whether rates can stop rising, so he scuttles off to see… Continue reading