Over the last couple of weeks, the downfall of the banking industry took the front stage. Credit Suisse wasn’t spared which prompted its ongoing deal with UBS. Reports suggest that UBS will purchase Credit Suisse for more than $2 billion. While acknowledging this deal, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen went on to highlight the current state of U.S. banks.
In a joint statement, the duo said that both capital and liquidity positions of the U.S. banking system are healthy.
The statement further read,
“The capital and liquidity positions of the U.S. banking system are strong, and the U.S. financial system is resilient. We have been in close contact with our international counterparts to support their implementation.”
This isn’t the first time that authorities are stepping in with assurance around U.S. banks. Last week, Yellen told Congress that the banking system remains “sound”. She even affirmed that Americans can feel confident about the funds that are sitting in these banks.
Credit Suisse-UBS deal to bring about financial stability
Additionally, speaking about Credit Suisse’s deal with UBS, the Fed Chair and Yellen touted it to be necessary. They believe that this move was intended to calm financial markets. The government officials wrote,
“We welcome the announcements by the Swiss authorities today to support financial stability.”
The Swiss National Bank also had a similar notion about the deal. The arrangement, according to the bank, was the most effective approach to controlling economic risks and regaining market trust.
The agreement was reached amid uncertainty in the U.S. banking system caused by the collapse of Silicon Valley Bank and Signature Bank. This further drove authorities to intervene to save uninsured depositors.
Alongside the U.S. government, the Bank of England as well as Christine Lagarde, President of the European Central Bank lauded Swiss authorities for their “swift action.”