Russian financial expert Igor Sosin, one of the directors of Gazprombank, said that the phenomena of the crisis in the banking system of the US and Europe could lead to a recession in Western economies.
The expert recalled that the problems in the US banking sector began on March 10 with the closure of Silicon Valley Bank in California, one of the twenty largest US commercial banks, which was the largest bankruptcy in this country since 2008. In addition, the authorities closed the New York Signature bank due to systemic risk, and the closure of the Silvergate cryptocurrency bank was also announced. Financial volatility has affected the European banking sector. The giant Credit Suisse found itself in a dilemma, and as a result, it was taken over by the largest Swiss bank, UBS.
The expert believes that the crisis in the banking system of the United States and Europe was the result of the implementation of interest rate risks there, which are based on the increase in base interest rates by central banks.
According to the expert, “it was clear that these phenomena would inevitably manifest themselves in the context of broad credit stimulus and rising inflation, which prompted some financial institutions to ignore and neglect interest rate risks.”
The expert believes that the losses and the speed with which the Western banking system will get out of this situation depend on how long the base rates remain high.
He stressed that the problem still remains unresolved: risks to financial stability have surfaced, and inflation remains high – well above the 2 percent limits that the US central bank wants to impose.