Heard by members of the Senate Banking Committee, she tried to "reassure them (...) that our banking system remains strong and that Americans can be confident that the money they have deposited will be available when they need it."

"This week's actions demonstrate our resolute commitment to ensuring the safety of depositors' savings," Biden's economy and finance minister said.

On Sunday, the US authorities had announced that they would guarantee the withdrawal of all SVB deposits and allow access to all deposits of Signature Bank, a New York institution that was closed automatically Sunday by the US regulator.

In addition, the Federal Reserve (Fed), the US central bank, has committed to lending the necessary funds to other banks that would need them to meet their customers' withdrawal requests.

"We felt that there was a serious risk of contagion of massive withdrawals" among customers who had funds in excess of the guaranteed amounts, "which could have brought down many banks and triggered panics," Yellen said.

The FDIC, which is the banking regulator, has guaranteed that all SVB and Signature Bank customers will have access to all of their funds, including beyond the usual limit of $250,000.

Risk of contagion

"One of the reasons we stepped in and declared (this) exception ... is that we recognize that there can be contagion in situations like this, and that other banks can then experience a similar panic, which we want to avoid," she said.

Thus, "we worked with the Federal Reserve and the FDIC to protect all depositors of the two failed banks. On Monday morning, customers were able to access all the money in their deposit accounts," she recalled.

But "shareholders and creditors are not protected by the government." "It is important to note that taxpayers' money is not being used or put at risk with this action," the minister stressed.

The situation on the banking front has been shaking global markets since late last week.

The banking giant Credit Suisse is in turmoil. On Wednesday, it suffered the worst session in its history on the stock market, plunging more than 24%, pushing the central bank to come to its rescue by making available up to 50 billion francs of liquidity (50.8 billion euros) to reassure the markets. On Thursday, Credit Suisse shares rallied with a gain of more than 19%.

© 2023 AFP