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Banking turmoil has potential to trigger financial crisis
March 27, 2023
Authorities around the world are on high alert for the fallout from the recent turmoil at banks following the collapse of Silicon Valley Bank (SVB) and Signature Bank in the U.S. and the emergency takeover of Credit Suisse.
“It’s a crisis for some obviously, but is it a financial crisis, who knows. Does it have the potential to be one? Yes, it does have the potential to be one,” CEO Shayne Elliott said in an interview on the bank’s website.
But he said it was premature to assume the current condition could result in “another GFC”, referring to the global financial crisis around 15 years ago that plunged the world’s major advanced economies into their worst recession since the Great Depression in the 1930s.
Australian banks did not suffer as much as those in the U.S. and Britain during the 2008 crisis, thanks in part to tighter lending standards and a more resilient home economy.
“This is a different issue. This is really to do with the global war on inflation and how central banks are raising rates very quickly in order to combat that, and that has casualties,” Elliott, the top executive at the country’s no.4 lender, said.
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