Economics

Aidan Regan: SVB was simply the first thing to break – more will follow

The stability of the system is largely reliant on household depositors willing to keep their cash in the bank and put up with zero interest on their savings

‘The banking regulations that emerged out of the crash were designed to mitigate against this, but capitalism always comes up with new ways of making money’ Photo illustration by Andrea Ronchini/NurPhoto/Getty

A core objective of public central banking is to provide financial stability in the event of a private banking crisis. Whether it was Sweden in the early 1990s, Japan in the late 1990s, Europe and the US in 2008 or Switzerland today, this means providing financing to banks that get into difficulty.

Absent this and capitalism would collapse, because financial capitalism moves in boom-bust-bailout cycles. Unlike what’s taught in most economic textbooks, financial markets are ...