Silicon Valley Bank’s failure is predictable – what can it teach us? | Joseph Stiglitz

The collapse of SVB highlights deep failures in the conduct of regulatory and monetary policy

• Live coverage of Silicon Valley Bank collapse
• Global banking shares slide as SVB fallout spreads
• Why did it collapse and is this the start of a banking crisis?

The run on Silicon Valley Bank - on which almost half of all venture-backed tech startups in the US depend - is in part a rerun of a familiar story, but it's more than that. Once again, economic policy and financial regulation have proven inadequate.

The news about the second-biggest bank failure in US history came only days after the Federal Reserve chair, Jerome Powell, assured Congress that the financial condition of US banks was sound. But the timing should not be surprising. Given the large and rapid increases in interest rates Powell engineered - probably the most significant since the former Fed chair Paul Volcker's interest-rate hikes of 40 years ago - it was predicted that dramatic movements in the prices of financial assets would cause trauma somewhere in the financial system.