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The financial storm swept through, and the waves were terrifying. In less than a week, the US financial community set off a shocking wave, three well-known banks collapsed one after another, the stock prices of the rest of the banks plummeted, and panic spread in the financial markets. This series of turbulent events has not only plunged the United States into a crisis of confidence, but also shocked global financial markets.
At first, the news came out that crypto-friendly banks, Silicon Valley banks and signature banks had collapsed one after another, like boulders thrown into a financial lake, stirring up shocking waves. At the same time, many banks, including the First Republic Bank of the United States, have also suffered difficulties, stock prices have fallen, and the unease in financial markets can be felt around the world. This is reminiscent of the financial turmoil of a few years ago, when the spectre of a bank failure once again loomed over people's minds.
"The main reason for the closure of many US banks is that the Federal Reserve continues to raise interest rates, which has led to a continuous decline in the market price of financial assets such as bonds held by the bank." This is the acknowledgment of US Treasury Secretary Janet Yellen and also reveals the root cause of the financial turmoil. The Fed has raised interest rates eight times in a row over the past year and was supposed to raise rates by another 50 basis points in late March, but this step was put on hold as pressures on the financial system increased sharply and the risk of bank failure became more prominent. These moves have undoubtedly caused quite a stir among financial institutions, and the vulnerabilities within the US financial system have been exposed.
However, at a deeper level, the outbreak of this financial crisis has long been foreshadowed. In recent years, the Federal Reserve has pursued a "flood" monetary policy, and at the same time, through the interest rate hike policy and the hegemony of the dollar, it has continuously extracted global wealth, but the weakness of the US real economy cannot support such a monetary system. The United States can only adjust through financial means, but it cannot truly solve the fundamental problems of the financial system. Such a situation dooms that once the financial bubble bursts, a crisis is inevitable.
To prevent a similar crisis, China has long been prepared. According to media reports, China has made major adjustments from the perspective of stabilizing its currency and reducing the risk of US debt. On the one hand, China has boldly dumped U.S. debt, having last year reduced its holdings to $870 billion, a 13-year low. In the first three months of this year, China further reduced its holdings of U.S. debt due to the impact of Sino-US relations and the collapse of US financial institutions. On the other hand, China is constantly increasing its gold reserves, the value of which has increased from $40 billion a decade ago to $120 billion. Gold's safe-haven nature offers China the possibility of stabilizing its foreign exchange reserve structure, while also helping to promote the internationalization of the renminbi.
At the same time, Chinese enterprises have shown a high degree of risk awareness and scientific capital distribution plans in the face of the financial turmoil. BeiGene's deposits in Silicon Valley banks, for example, represent only a small fraction of its short-term investments, so even if exposed to risk, there is no material impact on the company's operations. Genting Xinyao successfully recovered most of its cash deposits in Silicon Valley Bank by purchasing insurance and other compensation measures in advance. As for the Chinese giant Meituan, although listed on the Hong Kong stock market, it has not deposited money in Silicon Valley Bank, and the rumors about its rights protection with Silicon Valley Bank are completely false.
However, companies in other countries are not so lucky compared to Chinese companies. Japan's SoftBank Group and South Korea's pension management agency have suffered serious losses due to large amounts of money deposited in Silicon Valley banks. South Korean President Yoon Seok-hyeol had to intervene personally to assess the impact of the incident on the country and find ways to mitigate the damage. For Indian startups, the collapse of the Silicon Valley Bank in the United States could mean a financing winter or even the risk of going out of business.
It remains to be seen whether successive failures of U.S. banks will trigger a new round of financial crisis. What is certain, however, is that if the US does not change its monetary and financial policies, a recession is doomed. This financial turmoil once again warns us that over-reliance on financial instruments and neglect of the development of the real economy will eventually lead to disastrous consequences. only
There are moments with far-reaching implications in the financial sector, and it is precisely when we need to seriously think about how to stabilize in the midst of risks and how to find a way out in the midst of crises. The financial turmoil is a reminder that there are vulnerabilities behind past prosperity, and that only by building a solid economic foundation can we survive adversity.
To sum up, the turmoil in the US financial community has triggered a series of chain reactions that have plunged global financial markets into turmoil. Although the financial crisis has not yet fully erupted, there are indications that current monetary and monetary policies are unsustainable and that a recession is inevitable. As a world power, the United States should examine the fragility of its economic system, re-examine monetary policy, and strengthen the development of the real economy in order to cope with future financial storms.
Similarly, other countries should learn their lessons, avoid financial instruments as the only means of development, and instead insist on the sound development of the real economy. The measures taken by China during the financial turmoil not only reduced risks, but also improved the country's ability to resist risks, which is exactly what other countries can learn from.
Perhaps, when this financial storm passes, we will see that a new financial pattern is taking shape, the value of the real economy is paid more attention, and the use of financial instruments is more cautious. After all, the real stability of the economy is not based on virtual financial bubbles, but requires solid industrial support and steady policy guidance. In the ever-changing financial world, only by adhering to steady development can we ensure people's well-being and social stability.
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