The guests of the "Beyond the News" program agreed that the repercussions of the crisis - caused by the recent collapse of the "Silicon Valley Bank SVB" - will not reach the extent it reached during the global financial crisis in 2008, and caused a tsunami in the global economy, whose impact continued until 2015.
In the episode of the program (14/3/2023), the expert in economic affairs, Nihad Ismail, considered that the comparison between the two crises is unrealistic.
The current crisis, in his estimation, is not as large as the US financial economy was exposed to in 2008, which affected more than 500 banks, and the global loss at that time amounted to $10 trillion, and led to an economic recession whose repercussions continued until 2015.
This comes against the background of what the banking sector is witnessing in global markets, of continuous bleeding in stock prices due to the repercussions of the collapse of the Silicon Bank, and the spillover effects of this collapse, despite the reassurances of US President Joe Biden, as Bloomberg Network confirmed that $ 465 billion has evaporated from the global financial markets in 3 days only.
Speaking to the “Beyond the News” program, Ismail indicated that, this time, swift and vigorous measures were taken to contain the crisis and the Federal Reserve moved immediately by opening a line of financing for all banks, so that they would obtain loans that would help them stop selling treasury bonds, which would incur huge losses. , so that they do not suffer from a liquidity crisis, as happened with the Bank of Silicon Valley.
Although the crisis appears as a snowball that grows with its decline, it is - according to Ismail - not in the form that occurred in 2008, despite his acknowledgment of the existence of fears that he believes will gradually disappear, considering the losses incurred by banks as "book or paper" that will end after an expected stability of things with containment the crisis.
The economist believes that the impact of the crisis on the Arab region will be limited and insignificant, because there is no bank in it that has a direct relationship with a silicon bank.
But if the crisis widens and grows and affects the dollar and interest rates, this will extend to the region, because currencies and banks in the Gulf are linked to the dollar and raise US interest rates.
He considered Moscow's statements - that its banks are insured - as political, given that the Russian economy is based on the communist system and does not operate independently, and the Central Bank is subject to the political decision, and it shows Moscow is happy with the matter.
Move quickly and decisively
In turn, the chief researcher at the Arab Center in Washington, Khalil al-Anani, drew attention to the rapid and decisive move that the Biden administration took with the onset of the crisis, as it took over the bank and gave guarantees to depositors, and started direct investigations to hold those responsible for the crisis accountable, because there are suspicions that officials in The bank sells shares two weeks before the crisis.
Biden had pledged what he called "accountability" with regard to the turmoil in the banking sector from time to time, and the "Wall Street Journal" newspaper quoted - quoting informed sources - that the Ministry of Justice and the Securities Commission had initiated an investigation into the collapse of the Silicon Bank.
Al-Anani believes that what the US administration has done has created a kind of relief, reassurance, and relative confidence among depositors and investors, and that there is no panic or fear. He also expected that the US Central Bank would postpone its next meeting, in which it was expected to raise the interest rate again.
He pointed out that there is talk about setting new controls and restrictions on investing in funds, especially with regard to the technology sector and the cryptocurrency sector, in light of criticism directed at the US administration about the reasons for the decline in oversight of the bank, which led to the collapse of the Silicon Bank.