In this turbulent financial moment, First Republic Bank of the United States declared bankruptcy, becoming the fourth major bank with super assets to collapse this year, triggering distrust and concern in the global financial system. Silicon Valley Bank, Signature Bank, and Credit Suisse have declared bankruptcy one after another, and the financial turmoil has quietly swept in, with a huge impact on the rich and ordinary people alike. This article will take you through the ins and outs of this financial turmoil and present you with 5 important things to keep in mind to protect your wealth.
An overview of bank failures
The first was the collapse of First Republic Bank in the United States, which became the fourth major bank to fail this year with super assets, with assets of $213 billion, equivalent to 14 times the total assets of China's four major banks. This tragedy has not only caused heavy losses to the wealthy Chinese, but also raised serious doubts about the stability of the financial system around the world.
Silicon Valley Bank, Signature Bank, and Credit Suisse have declared bankruptcy one after another, and this series of events has plunged the global financial system into instability. Silicon Valley Bank, which declared bankruptcy in March 2023 with $210 billion in assets, Signature Bank, with about $110 billion in assets, is not immune to the doom, and Credit Suisse, the world's fifth-largest consortium with $1.1 trillion in total assets, is also a victim of this wave of collapses. This series of failures not only sent waves through the global financial markets, but also brought the trust of the rich and ordinary people in the financial system to a freezing point.
The instability of the global financial system
By the end of 2022, five banks in China had gone bankrupt, and small and medium-sized banks experienced a wave of mergers and restructurings. More than 4,000 small and medium-sized banks with total assets of nearly 80 trillion yuan are undergoing a new round of transformation, and more than 20 have completed or are in the process of merger and reorganization. This is not only an impact on the banking system, but also a wake-up call for the global financial system.
The plutocrats have not been spared. Credit Suisse's AT1 bond clearance has cost billions of dollars to China's billionaires, causing them to shift their investments and triggering a massive global exodus. This behavior is not only manifested in distrust of the financial system, but also plunges the global economy deeper into the quagmire.
Billionaire losses and asset transfers
The financial turmoil has caused heavy losses to the wealthy Chinese. Credit Suisse's AT1 bonds were wiped out, costing China's billionaires billions of dollars. This huge loss has made the rich realize that even they are not immune to financial risks. As a result, the plutocrats have shifted their investments away from high-risk areas, a move that has triggered a massive global withdrawal of funds and a renewed distrust and concern for the financial system.
The safety of ordinary people's funds
For ordinary people, bank failures may be directly related to their daily lives. According to mainland law, a bank only deposits less than 500,000 yuan, and deposits below 500,000 yuan can be fully compensated. The wealthy adopt a strategy of spreading their deposits across multiple banks to reduce the risk of capital loss. This also means that depositors do not have to pay additional insurance premiums because banks purchase state-mandated insurance mechanisms.
It is worth noting that deposit insurance is mainly applied to bank deposits, and other financial products cannot be fully covered in the event of bank insolvency. Therefore, ordinary people need to be vigilant at all times, diversify their investments, reduce risks, and avoid putting their eggs in one basket. It is recommended to choose a safe and low-risk investment method to ensure the steady growth of wealth.
Tips on how ordinary people can protect their money bags
In the face of this financial turmoil, ordinary people should always be vigilant and take a series of measures to protect their wealth. First of all, it is necessary to clarify the scope of bank deposit insurance and ensure that the deposit is less than 500,000 yuan, so that the full compensation can be obtained in the event of bank failure.
Second, learn Xi diversification strategy of the wealthy, and spread the funds in multiple banks or a variety of investment varieties to reduce the risk of loss. Remember, "don't put all your eggs in one basket" is the basic rule of protecting your wealth.
Choose a safe, low-risk investment approach. When the financial market is volatile, stay calm and do not blindly follow the trend to invest in high-risk varieties. Choose those investments that have been carefully researched and have stable returns to ensure the safe growth of your wealth.
In this wave of mega-bank failures, we have seen the fragility of the financial system and the enormous pressures faced by the rich and ordinary people. However, there are also opportunities in crisis. We need to take a smarter investment philosophy and protect our money bags. Bank failures are just a temporary turmoil in the financial markets, and the right financial strategy is the way to last.