The collapse of the fourth US bank in 3 weeks

Al-Anbat - Dema Hina

The US bank "First Republic Bank” stock fell about 47% on Monday after a multibillion-dollar rescue deal arranged by the top US banks failed. The move failed to convince investors that the struggling bank had stable financial foundations, leading to the collapse of the US bank’s stock.

The fall of "First Republic Bank” comes after the sudden collapse of "Silicon Valley” and "Signature Bank” recently raised concerns that worried customers could withdraw their deposits from other US banks.

According to "Bloomberg” agency data, "First Republic Bank” stock closed Monday's trading, down by 47.11% at $12.18.

Regarding the reasons for the recent collapse of US banks, economist Alexander Nazarov explained in a post on his Telegram channel, Saying: "After the Federal Reserve raised the interest rate, investing in money market funds became more profitable than holding money deposited in the bank. (Money market funds invest in US short-term government bonds and other commercial bonds) That is, people have started withdrawing money from bank deposits, since the summer of 2022, they have withdrawn half a trillion dollars from US banks, and recently the withdrawal has accelerated significantly”.

He added: "In doing so, the Fed will have to decide on Wednesday whether to continue raising interest rates, keep deposits flowing, killing banks or reverse "quantitative tightening” and encourage inflation again. But the Fed can go through the crazy experience of raising the interest rate while at the same time launching the quantitative easing of a select few”.