In March 2023, the rapid collapse of Silicon Valley Bank (SVB), a major provider of finance to the technology and venture capital sectors, threatened to trigger a wider crisis across regional banking sectors. In response, the Federal Reserve and other regulatory authorities intervened by invoking a 'systemic risk exception' to guarantee all deposits (including uninsured deposits) and providing emergency funding facilities to stabilize the system.
Evaluate whether a central bank should always intervene to rescue a major commercial or retail bank that is facing collapse.
