ISTANBUL
The US Federal Reserve warned that large deposit outflows from American banks may have an effect on overall credit conditions across the nation.
Three US banks -- Silicon Valley Bank (SVB), Signature Bank and First Republic Bank --- failed in the last two months due to a significant amount of deposit outflows, prompted by concerns about poor management of interest rates and liquidity risks, according to the Fed's Financial Stability Report released late Monday.
To prevent larger spillovers in the banking system, the Federal Reserve, the Federal Deposit Insurance Corporation and the Treasury Department took actions in March to protect depositors and support the continued flow of credit to households and businesses, it added.
While financial markets normalized and deposit flows have stabilized, other banks that experienced large deposit outflows continue to experience stress, while these developments "may weigh on credit conditions going forward," it said.
The Fed said it has been monitoring potential shocks and assessing vulnerabilities of the financial system, especially in situations such as asset valuation pressures, excessive borrowing by businesses and households, excessive leverage within the financial sector and the possibility of risks regarding investors rapidly withdrawing their funds.
