What is happening in the banking world is really alarming. In particular, tonight it became known that the US authorities are studying possible measures to guarantee all bank deposits in case the crisis intensifies.


Earlier the government intervened in Silicon Valley Bank and was also forced to guarantee the availability of all deposits. And as JPMorgan analysts soon pointed out, given what is happening, the US banking system could face an injection of $2 trillion from the Fed's emergency lending programme. And that means printing more money, which will eventually lead to inflation again.


Also at the weekend it was revealed that investor and billionaire Warren Buffett was in talks with the banking sector. He has previously helped banks by providing cash. Perhaps the current case will be no exception.

What is happening to the banking system

The liquidity support plan will be implemented through so-called “swap lines” – an agreement between the two central banks to exchange currencies. Swap lines were previously used by the US Federal Reserve as an emergency measure during the 2007-2008 global financial crisis and the COVID-19 pandemic in 2020.

Such agreements between central banks are designed to boost liquidity in dollar funding markets in difficult economic conditions, Cointelegraph reported. Forming a swap line between the two central banks means that when the need arises, they commit to exchanging currencies with each other, usually at the market rate. At the same time, a second transaction is agreed upon, consisting of the repurchase of the currencies after a certain period of time at a predetermined rate.

Technically, currency swaps are not loans: they are an exchange of assets, with the foreign exchange received being recorded on the balance sheet of each central bank as a change in foreign exchange reserves. However, from another perspective, this exchange of currencies can be seen as loans from central banks to each other, with the loans also being collateral for the loan.

The Fed has commented on the swap lines strategy. Here is a relevant quote.

The network of swap lines between these central banks is a set of available standing facilities and serves as an important liquidity reserve for easing tensions in global funding markets, thereby helping to mitigate the impact of such tensions on the supply of credit to households and businesses.


In other words, the US Federal Reserve recognises that there are problems in the market, which has already led to the closure of three large US banks in the middle of the month. The banks in question are Silvergate, Silicon Valley Bank and Signature, all of which were involved in the digital asset industry.

Despite what is happening in the economy, the US president has expressed support for the current Fed chairman Jerome Powell. Accordingly, the government is surely hoping to address the current problems.


It is commonly believed that the global financial crisis of 2008 was caused by the US mortgage crisis and the collapse of the real estate market, among other things. However, renowned Bitcoin critic Peter Schiff has his own opinion on the matter. Here’s his rejoinder.

When the government introduced a slew of new banking regulations after the 2008 financial crisis, we were assured that this would never happen again. But one of the causes of the 2008 financial crisis was too much government regulation. That is why this crisis will be even worse.

Schiff's arguments are similar to those of an avid cryptocurrency fanatic. At the same time, Schiff has no perception of digital assets at all - in the past, he has often predicted the collapse of the entire crypto industry, and every time he has been proven wrong. And it is the crypto market that has so far responded best to what is happening to US banks.

Changpen Zhao, head of the cryptocurrency exchange Binance, also voiced his criticism of what is happening in the financial sector. First and foremost, he directed it at the rules within the banking system. Here’s his rejoinder.

About every ten years, the same banks collapse. We help them survive and then it happens again. And each time it costs more and more.

At the same time, new banks waiting for the appropriate approvals are finding it increasingly difficult to enter the market and compete with the existing players. In addition, they have to operate under the same rules as the old banks – those that have already gone bankrupt. Is this the free market?

That is, Zhao thinks it is a strange practice to help banks which had previously faced financial problems and had not previously made a withdrawal. At the same time it is difficult for new players to enter the industry, which creates a vicious circle. Apparently, Chanpen thinks it is appropriate to change the rules under which banks operate.

We believe that the current situation in the banking sector is the worst in recent years. Already many banks are under threat of collapse, so investors' expectations from traditional finance are hardly high. In this case, the case for cryptocurrencies becomes much stronger, as digital assets are still independent of bankers' actions and essentially insured against certain government failures.

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