US Banking Crisis Will Not Affect The Financial System Of The Dominican Republic

[playacaribe2]

US banking crisis will not affect the financial system of the Dominican Republic

<p>The Monetary Board concluded in an extraordinary session held yesterday that the Dominican financial system has no direct interaction with failed banks in the United States. At the meeting, aimed at discussing the situation presented by international markets after the bankruptcy and closure...

dominicantoday.com

Anytime the government tells you it is not a problem......................they are concerned.

And of course they have counter party risk in their international investments................like everyone else in the global financial system.

The latest banking crisis has now spread to Europe with Credit Suisse looming as the next large bank to fold.

And the banks will all be backstopped or liquidated in an orderly fashion, but the downstream effects from the causes of the collapse will ripple through the world economy............and the DR will be no exception..............no mater what they tell you.

That is not to say the DR banks will or are even on the verge of problems, but the economy may well start to contract as lending standards tighten globally......due in part to the dramatic rise in interest rates post pandemic.


Respectfully,
Playacaribe2

 

[Gadfly]

Domtoday calling it a crisis. Not a reliable source of news. But I like your economic posts.

 

[playacaribe2]

Domtoday calling it a crisis. Not a reliable source of news. But I like your economic posts.

They do a terrible job of translating their stories into English.

This particular article is actually a press release from the Banco Central yesterday. Since then, Credit Suisse and several other European banks were also briefly halted from trading this morning as the crisis exposes the weaker banks globally. Reports out indicate 42 billion in deposits have left Credit Suisse as of this morning.

On the flip side, remittances are being reported by the Banco Central today as being up yoy and will probably continue an upward trend until the second half of 2023.


Respectfully,
Playacaribe2

 

[Kipling333]

I totally agree with playacaribe. Everyone around the world gets affected to some extent by bank failures in the USA. People start jumping at shadows or imagining the worst . It all goes right back to economic policies and whether a country prefers some government regulations ,especially in the banking industry or prefers to let the markets look after themselves. With London down a further 2% today ,I think it will soon be time to buy some more blue chips.

 

[chico bill]

It certainly isn't just a couple US banks.
The whole world from Canada to New Zealand was tossing money around like a broken pinata.
The smart people knew there was a day free money from government checks and zero interest rates was a train heading into a collapsed tunnel.
Interest rates in Europe are still hovering in the cellar. At some point bad banks need to go away.
SVB gave $74 million to BLM. That got them nothing but virtue signaling points. This ESG investment strategy goes against fundemental economics.
Hopefully DR banks don't fall into social engineering give aways.
But make no doubt higher interest rates will hurt DR too - they borrow a lot of money.

 

[Yourmaninvegas]

It is not a banking crisis is a failure of risk management (by a few institutions).
Anyone concerned with the safety of their personal bank can follow a few simple rules.
Trust yourself instead of institutions.
Therein lies your answer.

 

[playacaribe2]

It certainly isn't just a couple US banks.
The whole world from Canada to New Zealand was tossing money around like a broken pinata.
The smart people knew there was a day free money from government checks and zero interest rates was a train heading into a collapsed tunnel.
Interest rates in Europe are still hovering in the cellar. At some point bad banks need to go away.
SVB gave $74 million to BLM. That got them nothing but virtue signaling points. This ESG investment strategy goes against fundemental economics.
Hopefully DR banks don't fall into social engineering give aways.
But make no doubt higher interest rates will hurt DR too - they borrow a lot of money.

Yes they will.

And the likelihood is that we will not know how exactly how much of the DR international reserves has been invested in US bonds, or whether BanReservas has also invested in Mutual Funds or Bond Funds that hold stock and/or debt in Silicon Valley Bank.

For a snapshot of how this has affected lots of other banks see the chart;

Fed Loaned $160 Billion to Banks and $142 billion to FDIC. But QT-Related Roll-off Continued

At around 4.75%, plus collateral, these are expensive loans for banks.

wolfstreet.com

It appears the turmoil has not yet subsided and may take some time to sort out. In the short term, global lending will likely be curtailed and limited to only the strongest borrowers, so that financial institutions can shore up their balance sheets in the event a run takes place on their bank.

Shorter term, speculative grade bonds, like those of the DR, will be much harder to place as a flight to quality ensues.

Respectfully,
Playacaribe2

 

[Yourmaninvegas]

The fractional reserve banking system...
The banks do not have the depositors money.
If they did...a bank run could not happen.

Individuals here in the 🇩🇴 should not save money in banks.
They should store their money in the short term.
Until they can purchase a real asset.
Banks are for transactions.

Interest rates going up are not the result of the US Banking Crisis.
Anyone following the actions of central banks around the world knows this.
If anything, if enough risk management departments at enough banks have not been doing their job...
Certain central banks may be forced to pump their brakes when it comes to interest rate hikes.

 

[chico bill]

It is not a banking crisis is a failure of risk management (by a few institutions).
Anyone concerned with the safety of their personal bank can follow a few simple rules.
Trust yourself instead of institutions.
Therein lies your answer.

The few ? Keep watching and you will learn a valuable lesson in economics, as farmland banks, and rural and mid-size banks need rescues or buy outs.
We will be left with only banking giants, and some of them are shaky

 

[chico bill]

Yes they will.

And the likelihood is that we will not know how exactly how much of the DR international reserves has been invested in US bonds, or whether BanReservas has also invested in Mutual Funds or Bond Funds that hold stock and/or debt in Silicon Valley Bank.

For a snapshot of how this has affected lots of other banks see the chart;

Fed Loaned $160 Billion to Banks and $142 billion to FDIC. But QT-Related Roll-off Continued

At around 4.75%, plus collateral, these are expensive loans for banks.

wolfstreet.com

It appears the turmoil has not yet subsided and may take some time to sort out. In the short term, global lending will likely be curtailed and limited to only the strongest borrowers, so that financial institutions can shore up their balance sheets in the event a run takes place on their bank.

Shorter term, speculative grade bonds, like those of the DR, will be much harder to place as a flight to quality ensues.

Respectfully,
Playacaribe2

Buying bonds in a fast rising interest rate environment is insanity, so hopefully many banks don't go down that rabbit hole, including in DR.
When interest rates go up, newer bonds, which have higher interest rates mean existing fixed-rate bonds must sell at a discount to compete, therefore if some one wants to sell them, they likely will lose more principal than any interest accumulated to that point.
And banks don't want hold bond assets to maturity in rising interest rate environment, they are just hedges in fixed rate environments.

 

[playacaribe2]

Buying bonds in a fast rising interest rate environment is insanity, so hopefully many banks don't go down that rabbit hole, including in DR.
When interest rates go up, newer bonds, which have higher interest rates mean existing fixed-rate bonds must sell at a discount to compete, therefore if some one wants to sell them, they likely will lose more principal than any interest accumulated to that point.
And banks don't want hold bond assets to maturity in rising interest rate environment, they are just hedges in fixed rate environments.

And t your post is a perfect example of what got Silicon Valley Bank into trouble.

On the other hand Credit Suisse, which looks to be being acquired by UBS, is just a poorly run, poorly regulated G-SIB bank.

But because of their size, they are categorized as to big too fail…….lest they start a global domino affect.

Banks and Central Banks around the globe are busy looking at their bond portfolios for potential exposure to any contagion, and the DR is no exception.

Respectfully,
Playacaribe2

 

[Yourmaninvegas]

Those of us who pay attention to current events when they are happening do not need to watch anything to learn "a valuable lesson in economics, as farmland banks, and rural and mid-size banks need rescues or buy outs"

I was at ground zero for this:

How the Unthinkable Happened in Arizona

In the go-go, boom-boom days, they said what happened to savings and loans in Texas could never happen here.

www.latimes.com

Those seeking to educate me should pay attention to history.
I can sink a twelve foot putt that that is going to break a foot right because I can read the greens.
Nothing but cup...⛳

Which brings me back to my original point...
All people (including those who live in the 🇩🇴 ) need to recognize that the tools to protect yourself from a banking crisis exist.
All you need to do is pay attention to your own financial life and use them.

Is that education enough for you ❓