Contagion

On March 10, 2023, one of America's leading financial institutions, Silicon Valley Bank (SVB), failed. The bank was established in 1983 and was the financial partner of innovation and technological companies. During the pandemic, the bank's capital increased unexpectedly. Like all other banks, SVB invested the money in Treasury-bills to earn profit since they are considered risk-free. But when the US government raised the interest rates on bonds, their prices fell, triggering a collapse.

This collapse is being considered the most serious bank failure since the financial crisis of 2008 and is expected to have widespread effects on the whole global financial system. People in this country who have nothing to do with American banks or Silicon Valley will also suffer. In an era where our economies are so interwoven, we need stronger global financial regulations. Pakistan is already facing its worst economic crisis and is not capable of enduring another setback.

Rumaissa Xaenub Chouhan

Islamabad