<abstract xmlns="http://www.w3.org/1999/xhtml">

The new lesson for banking sector came on March 10th 2023, when the bank, which had $212bn of assets, failed with spectacular speed, making it the biggest lender to collapse since the global financial crisis of 2007–2009. By loading up on long-term bonds, Silicon Valley Bank (SVB) had taken an enormous unhedged bet on interest rates staying low. That bet went wrong, leaving the bank insolvent.
The analysis of selected reports, data in conjunction with the analysis of financial documents are to indicate the areas of threats related to the privileged treatment of government bonds in banks’ balance statements. As a result of the analysis, the negative consequences of the accumulation of government bonds in banks’ balance sheets and their preferential treatment as zero-riskand background of series of events unfavorable for the bank were indicated. The collapse has been presented as an example of a misguided strategy.
The new reality teaches that safe securities, such as government bonds, can no longer be considered as safe. The result of the analysis is to show the possibility of the prediction of not enough liquid assets to satisfy deposit withdrawals and confluence of events caused higher risk.
</abstract>

The new lesson for banking sector came on March 10th 2023, when the bank, which had $212bn of assets, failed with spectacular speed, making it the biggest lender to collapse since the global financial crisis of 2007–2009. By loading up on long-term bonds, Silicon Valley Bank (SVB) had taken an enormous unhedged bet on interest rates staying low. That bet went wrong, leaving the bank insolvent.
The analysis of selected reports, data in conjunction with the analysis of financial documents are to indicate the areas of threats related to the privileged treatment of government bonds in banks’ balance statements. As a result of the analysis, the negative consequences of the accumulation of government bonds in banks’ balance sheets and their preferential treatment as zero-riskand background of series of events unfavorable for the bank were indicated. The collapse has been presented as an example of a misguided strategy.
The new reality teaches that safe securities, such as government bonds, can no longer be considered as safe. The result of the analysis is to show the possibility of the prediction of not enough liquid assets to satisfy deposit withdrawals and confluence of events caused higher risk.

Consequences of Government Bonds Preferential Treatment in Bank’s Balance Statements, Exemplified By the Collapse of Silicon Valley Bank

Studies in Logic, Grammar and Rhetoric

This work is licensed under the Creative Commons Attribution 4.0 International License.

The new lesson for banking sector came on March 10th 2023, when the bank, which had $212bn of assets, failed with spectacular speed, making it the biggest...

Consequences of Government Bonds Preferential Treatment in Bank’s Balance Statements, Exemplified By the Collapse of Silicon Valley Bank

Online veröffentlicht: 31. Dez. 2023

Seitenbereich: 309 - 328

DOI: https://doi.org/10.2478/slgr-2023-0016

Schlüsselwörter
government bonds, preferential treatment, bank’s balance statement, collapse, Silicon Valley Bank, consequences

© 2023 Ewelina Idziak, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Consequences of Government Bonds Preferential Treatment in Bank’s Balance Statements, Exemplified By the Collapse of Silicon Valley Bank

Online veröffentlicht: 31. Dez. 2023

Seitenbereich: 309 - 328

DOI: https://doi.org/10.2478/slgr-2023-0016

Schlüsselwörtergovernment bonds, preferential treatment, bank’s balance statement, collapse, Silicon Valley Bank, consequences

© 2023 Ewelina Idziak, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Schlüsselwörter
government bonds, preferential treatment, bank’s balance statement, collapse, Silicon Valley Bank, consequences