Mr Komsorn Prakobphol, Head of TISCO ESU, revealed that TISCO’s Center for Economic Analysis and Strategy estimates that the liquidity problem in the banking sector, initiated by Silicon Valley Bank (SVB) in the United States, will not spread as a systemic risk And not become a global economic problem like the subprime credit crisis that happened in 2008 from 3 supporting factors: 1. Problems in the banking sector in the United States. This round was caused by liquidity problems, not asset quality problems 2. The central bank has experience and has tools to solve liquidity problems, and 3. There is enough liquidity in the banking system The government has announced more measures in gradually to solve these problems. problem.
However, in terms of investment the Center for Strategy and Economic Analysis TISCO also advises investors to be careful because US stock prices are still at a high level It recovered to the same level as the beginning of March before the SVB news and the price is not current shares reflect various risk factors such as the risk of a global economic slowdown in the second half of the year. and inflation, which is not over yet and may cause the US Federal Reserve (Fed) to raise interest rates higher than market expectations. Therefore, the recommendation is to gradually increase stock weights when the S&P500 index falls below 3,700 points.
For details of the 3 supporting factors, the TISCO Center for Economic Analysis and Strategy sees that the liquidity problem this time will not be a crisis like 2008, as follows:
1. Problems in the US banking sector In this round, it was caused by liquidity problems, not asset quality problems like during the subprime credit crisis. A real estate bubble burst and collateral assets devalued, causing banks to collapse. But today’s tightening regulations on the banking sector have given the sector a much stronger financial position and better asset quality than during the subprime credit crisis.
2. Central banks are experienced and have the tools available to solve liquidity problems. The problem in this round was caused by withdrawing the depositors. This forced commercial banks to accelerate the sale of good quality assets. Most of them are government bonds coming out at low prices. and make the bank recognize the loss The Fed has come out to solve this problem by announcing liquidity measures for the banking sector, known as the Bank Term Funding Programme, where commercial banks can use government bonds and securities high quality debt as collateral to borrow from the Fed for one year. period This will help commercial banks to get more liquidity without having to suffer losses from selling such instruments in the market.
In addition, the United States Deposit Insurance Institute It has also announced full deposit protection for bankrupt banks. If the announced measures are insufficient, the US authorities may issue additional measures, such as expanding the deposit protection limit or full deposit protection. to recover the credit crisis from depositors and to slow down the outflow of deposits afterwards According to the weekly balance sheet reports of commercial banks, deposit outflows started to slow down in the last week. Although lending continues to grow, the negative impact of deposit outflows has not yet been seen.
3. Liquidity in the banking system is still sufficient. Currently, total bank reserves in the US commercial system are at US$3 trillion. When combined with liquidity in the Money Market Funds (Money Market Funds) another 2 trillion US dollars. This brings total liquidity to 5 trillion, which is still more than double the minimum level of liquidity required by banks at 10% of GDP, or about 2.5 trillion.
By InfoQuest News Agency (28 Mar. ’23)
Tags: SVB , Komsorn Prakobpol , TISCO , Thai economy