The March 2023 bank run is filling its casualty chart. After Silicon Valley Bank, Silvergate Bank, some regional banks and now Credit Suisse, the contagion continues and grows. The appropriation of the concert file by the international central banks did not help. Urgency and alarmism to provide liquidity translates into the word danger. “The more policymakers act, the more bad news investors expect”summarized Stephen Innes of SPI Asset Management, to AFP.
The crisis in the banking and bond markets cannot, in any case, be resolved immediately. But if everyone has their eyes turned towards the future and the consequences, it would be a shame not to return to the causes of this crisis and mention a particularly underestimated point on this seemingly purely financial subject. One point that would explain the sudden collapse of the Silicon Valley Bank and the accelerated contagion that followed: the Internet.
News coverage on social media is a first, as Silicon Valley Bank is the biggest bank default since 2008 in the United States. Never had a bank collapsed so quickly, mentioned Business Insider based on the words of Tom Vartanian, author of 200 Years of American Financial Panics. At the same time, Bitcoin saw its price explode at a time when no one believed it.
“Technology makes the regulatory structure obsolete”
They were hundreds of thousands of Internet users, Sunday evening for example, to learn in real time that a press conference by the Swiss authorities was going to be held to discuss an important measure on the Credit Suisse file. Measure that resulted from its takeover by UBS – its historic Swiss competitor. Same thing Friday, March 10, when the SVB came under the control of regulators, unable to assume its role with the deposits of its customers. The day before, Thursday March 9, more than 200,000 tweets mentioning the bank were published on the social network Twitter.
“It’s a total bank panic”wrote the entrepreneur and founder of Yext, in the afternoon of March 9. “The problem with a bank run is that there is no benefit to keeping your money in the bank at risk”, drove the nail Xavier Helgesen, founder of the holding Enduring Ventures, a few hours later. We remember that the GameStop affair, in a completely different register, had been orchestrated via large influential accounts on the WallStreetBets forum on Reddit.
Symbolically, some decided to delete their tweets, admitting that the wind of panic was increasing all the more with what could be read on social networks.
Siqui Chen, founder and CEO of Runway, explained it rather well by deleting his words from his account. He admitted he didn’t want “to be a contributor to these publications which only fan the flames towards a series of bank runs and degrade the image of banks”. Another founder told Business Insider what “the same kinds of tactics that can manipulate an election can be used to undermine a bank’s strength”.
Author Tom Vartanian admitted that in his view, “the speed of the crisis and that of social networks have taught us that technology is making obsolete the current regulatory structure, which was built in the 1930s”. He added that “the whole system needs to be looked at differently in a more adept environment with tech”. Before becoming an author and financial services adviser, the man served as general counsel to the Federal Home Loan Bank Board during the savings and loan crisis of the late 1980s.
