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In order to alleviate economic pressure, the Federal Reserve has launched a series of interest rate hikes in recent years, trying to effectively control the negative impact of inflation on the U.S. economy through this policy.
However, under the implementation of the interest rate hike policy, US banking institutions are facing a crisis.
The previous rounds of interest rate hikes in the United States have caused several banks to eventually go bankrupt. Now, there is news that the Federal Reserve will raise interest rates again.
In the face of this news, many people have speculated whether small and medium-sized banks in the United States are all terrified, and will a large number of bank failures be caused next?
The fundamental reason why the Fed continues to raise interest rates is the rising inflationary pressure in the United States.
The interest rate hike policy can further tighten the money supply and curb the rate of price rise.
As the core of the global economy, the Fed's various monetary policies will inevitably have a great impact on the global economy.
Although the economic development of the United States is relatively good, the problem of inflation has always existed.
In order to control the negative impact of inflation, the implementation of a continuous interest rate hike policy can reduce the money supply, which is also a good means to curb inflation.
Under the influence of this policy, investors and consumers will also be subject to certain restrictions to avoid excessive economic development.
The most important thing is that under the influence of the interest rate hike policy, the value of the dollar will be raised step by step.
As the value of the dollar rises, so does its attractiveness to some capital, and the value of the dollar will remain high at all times, reducing the risk of depreciation.
However, under the influence of interest rate hikes, companies or individuals need to pay higher costs in terms of borrowing, so there is a negative impact on consumption and investment.
Perhaps when the Fed first introduced its interest rate hike policy, it did not anticipate the impact of these policies on US banking institutions.
But in fact, the main cause of the failure of US banking institutions is inseparable from the Fed's interest rate hike policy.
As consumers or businesses need to pay higher interest to banks when they take out loans, the pressure on banks' interest expenses is further increased.
At the same time, U.S. banks' investments in the financial sector will also be affected by these policies. Combined, these factors increase the risk of bank failures.
Although the interest rate hikes introduced by the United States have not had any impact on banks on the surface, in fact, the implementation of these policies has further increased the cost of borrowing, resulting in the compression of banks' profit margins.
In addition, a large amount of capital has repatriated, causing problems such as dollar shortages, and the emergence of these problems may make banks fall into development difficulties and even go bankrupt.
Judging from the current development of banking institutions in the United States, another bank is heading for bankruptcy.
It is understood that a branch located on Wall Street eventually declared bankruptcy because of poor management.
This news has once again aroused people's attention to the operation of small and medium-sized banks in the United States, and some people familiar with the matter have even revealed that the Federal Reserve will not interfere in the bankruptcy of American banks.
If the Fed had intervened, perhaps the branch would not have gone bankrupt.
Anyone who knows the Federal Reserve knows that it is an institution concerned with the formulation of US monetary policy, and this institution exists to maintain the stability of the US economic and financial system.
As a very important part of the economy, banks also play a very important role in the stability of the entire economy. Once a bank has a systemic risk, it will have a certain impact on the entire financial system.
As the maker and controller of the U.S. currency, the Fed should provide necessary support to some banks when they encounter risks or crises to avoid more crises.
In fact, the Fed did not lend a helping hand when some small and medium-sized banks were facing bankruptcy or operational difficulties. This action of the Fed has also been questioned by the outside world.
Recently, it has been reported that the Federal Reserve originally planned to implement an interest rate cut policy in March, and the implementation of the interest rate cut policy has a stabilizing effect on the development of the U.S. banking industry.
While the Fed was expecting to cut interest rates, the Fed did not pursue a new policy as previously planned. On the contrary, some US officials said that it is very likely that the interest rate on the dollar will continue to be raised in the future.
At present, many small and medium-sized banks in the United States are facing a development crisis, and if interest rates continue to rise, then these banking institutions will face a more severe operating crisis.
It is likely that more and more small and medium-sized banks will go bankrupt because they are unable to provide enough interest to their savers.
At the same time, the interest rate hike policy may also cause banks to face more bad or dead debts, further exacerbating the development difficulties of banks. At that time, it will be increasingly difficult for small and medium-sized banks in the United States to operate.
What do you think about the Fed's interest rate hike?