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WorldEuropeThe US banking crisis has spread to Europe

The US banking crisis has spread to Europe


The crisis in the banking sector did not start a month ago. The beginning of the end of financial and credit institutions began in the United States in 2008, and then the harmful impact began to spread to many countries, mainly to European states. This crisis has led to the fact that the economies of many countries will soon be on the verge of collapse. The Turkish edition of Yeni Safak writes about it.

The problems that have arisen in national economies amid the COVID – 19 pandemic, the increase in spending and the consequent rise in prices, as well as the decisions of central banks to raise interest rates in due to ongoing inflation, again had a negative impact on the financial system, pushing it to its limits.

Meanwhile, it is evident that the withdrawal of funds by depositors from even stable institutions due to uncertainty about their safety can lead to the collapse of the entire banking system. Of course, there is no fault of the people in such behavior, but state officials and bank management have it.

On the other hand, due to the strong interdependence and complex commercial and financial relationships between banks, a financial crisis can have a contagious effect, potentially affecting other institutions as well. In this regard, their merger is seen as one of the most important steps towards minimizing the consequences of the crisis.

Several factors contribute to the spread of the crisis in the banking system. The most important of these are the intensity of commercial relations between banks, the financial links between countries and the partnerships formed by trade. Therefore, when a bank goes bankrupt, its other partners, who have claims against the bankrupt institution, are very likely to suffer from the crisis as well.

Simply put, Europe, once protected by the ocean, in the age of globalization becomes vulnerable to all the modern consequences of friendship with America. This is especially true on the financial and economic side. Any business in the United States is like a lottery: it is always active, assertive, often takes risks and acts with anger. The speculative behavior of investors and corporations that has become a hallmark of North American business, transformations in investment funds and negative shifts in savers’ beliefs may further exacerbate the banking crisis due to “herd behavior”. “financial markets.

Copyright © 2023 The Eastern Herald.

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