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Biden made an important announcement about the banking crisis

After the collapse in the US that started on March 9, concerns are growing that the banking crisis will spread, and on Friday fears also intensified in the European banking system. The markets were also spooked by the fact that the Federal Reserve finally continued to raise interest rates this week and tightened it by 25 basis points.

According to US President Joe Biden, however, there is no need to worry: medium-sized banks should not be in danger.

According to Biden, American banks are in pretty good shape, people’s savings are safe, and he doesn’t see the sector ready to explode, he writes in his summary Reuters.

“If we find that there is more instability than it appears, then we would be in a position where the Federal Deposit Insurance Corporation (FDIC) would have the authority to guarantee deposits above $250,000, as it has already done,” he told reporters in the Canadian capital. , at a press conference in Ottawa.

In the US, regional lenders are facing a crisis of confidence after the collapse of Silicon Valley Bank and Signature Bank this month. The turmoil prompted regulators to take unprecedented steps to guarantee SVB and Signature’s deposits.

In recent days, Biden, US Treasury Secretary Janet Yellen and other banking regulators have issued statements to reassure the public that the US banking system is safe. Even so, according to reports on March 15, there was a massive outflow of deposits in the United States.

The reassurance has had no effect, with investors selling off bank stocks worldwide in the past two weeks as some blame rapid interest rate hikes to curb inflation as the root cause of the collapse.

Biden said it would take time for the situation to calm down, but said what happened to Credit Suisse in Europe would not affect American banks. However, the markets did not react in this way as the president’s words would suggest: on Friday, concerns also intensified in the case of Deutsche Bank.

I don’t see anything on the horizon that could explode. But I understand that there is some uneasiness about it

– stated the president.

Cover photo: David Kawai/Bloomberg via Getty Images.