1. Liquidity risk Government intervention. ( critical thinking question)

The role of regulators, governments, and central banks in bolstering financial stability and liquidity can be approached through various mechanisms, including deposit insurance, discount windows, and bailouts, as demonstrated during the Global Financial Crisis by the American government and regulators. However, despite Silicon Valley Bank (SVB) having $212 billion in assets and being covered by deposit insurance, it suffered a rapid and significant failure on March 10, 2023, marking it as the largest lender to collapse since the global financial crisis of 2007-09.

Please review the attached video and select one of the provided positions for discussion.

A. the SVB case demonstrates that even if a bank is covered by a deposit insurance scheme, it is not immune to bank runs. In fact, deposit insurance can potentially increase moral hazard risks, as management and shareholders may take on more risk to seek higher returns.

B. In the SVB case, the deposit insurance scheme itself wasn't the issue; rather, it was the weaknesses in regulatory governance and the recklessness of the bank's management that led to the bank's troubles.

C. In my country, the deposit insurance scheme is in effect, and it has been successful. I have confidence that other banks will not face similar issues as long as the scheme is properly managed.

D. I believe that the government's intervention in the United States during the SVB collapse was timely and effective. I think such government intervention is expected and can be done from any other government in the globe during crises, and it serves as a crucial safety net, alleviating concerns about future crises.

E. I have my own thoughts and insights on this matter that I would like to share separately.