“Something Wicked This Way Comes.”
–       Ray Bradbury

There are economists and financially minded people predicting that bad things are coming. The international banking crisis has begun. The collapse of Silicon Valley Bank (SVB) was the result of a run on its deposits by customers and the bank’s inability to meet that demand. The first domino had fallen. Next to begin to topple, was New York’s Signature Bank. The Federal Reserve stepped in to prevent the widespread run on banks across the nation. Money was pumped in to restore liquidity, like a giant catheter affixed to a patient in the emergency ward. Would the federal government’s rapidly mustered monetary measures hold the dam wall from breaking? The International banking crisis: Are Australian banks safe?

Global Banking Crisis 2.0 On The Cards

Nothing motivates citizens of capitalism quite as quickly as any sniff of risk to their money. Loud assurances by the US government guaranteeing deposits up to $250 000 were repeatedly issued. In fact, in the case of Silicon Valley Bank, all deposits were guaranteed by the government, even those above the quarter million mark. Depositors were safe but investors would lose their money.

“As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.”
–       https://www.fdic.gov/news/press-releases/2023/pr23019.html

Meanwhile, Credit Suisse was wobbling on the other side of the world. The share price of the Swiss investment banking giant tumbled and crashed. More panic in the bond market and it is the bond market at the heart of this banking crisis.

“Last year Credit Suisse credit default swaps surged in price. In simple terms the financial markets were concerned about the investment bank’s ability to fund itself and the rising risk it wouldn’t be able to pay all its debts. The bank had faced several scandals, but questions were also being asked about its profitability and the viability of its investment banking division.”

–       https://www.abc.net.au

Credit Suisse has been swallowed up by its fellow Swiss competitor UBS in a takeover. This has negatively impacted the share price of UBS.

California’s Silvergate bank became the third US bank to collapse under the tidal wave of this international banking crisis. A crypto currency feeder bank via its Silvergate Exchange Network it had come under scrutiny in regard to its dealings with FTX customers. (Jessica Sier, AFR, 9 March 2023)

Bond Market Manoeuvres Making Some Banks Unviable

The common narrative running through this international banking crisis is these banks moving their depositor’s funds into long term bonds. The severe interest rate rises by the central bank has seen the price of these bonds decrease well below parity if redeemed early. The bank runs mean that these assets cannot meet the short term liabilities required and failure results. The bond market price falls as interest rates rise. There have been enormous investor moves in the bond market, as investors buy government bonds to find safe harbours for their funds in uncertain times. The market clearly suggests we are on the eve of a major financial crash.

“The market is telling us something very bad is coming,” bond investor Angus Coote warned ominously.
–       David Taylor, ABC News, 16 March 2023

Trump Tinkering Removed Financial Safeguards in Banking Sector

Donald Trump’s presidency has its short sighted finger prints on the emerging current banking crisis. Banks are supposed to hold enough cash reserves to meet the financial obligation to their depositors. Trump changed the rules to allow mid-tier regional US banks to not have to meet these requirements. Thus, Silicon Valley Bank was able to invest billions in Treasury bonds without any insurance. SVB executives lobbied for the Trump deregulation, which led to its recent demise.

Economic Disaster Indicators Present

The pundits tipping a financial disaster point toward bank failures as one of 3 indicators that the US economy is headed for a big cliff and fall. The others are a depressed housing market, which currently shows that housebuilding has been down 20% over the past 12 months, and rising unemployment. The unemployment rate is slightly up 0.2% points at 0.5 percentage points.

“ “Banks tend to fail just before recessions begin,” Joshi says. “Ahead of the recession that began in December 2007, no US bank failed in 2005 or 2006. The first three bank failures happened in February, September, and October of 2007, just before the recession onset.”
–       Larry Elliott, The Guardian, 20 March 2023

A fourth bank, First Republic Bank, was about to fail last week, before the banking sector stepped in to boost its liquidity by some $30 billion. This rescue was funded by some of the biggest banks in America. The share price of First Republic bank has plunged by 90% on the back of its near collapse.

“When runaway inflation and bank failures struck in Germany in the 1920s, the middle class was destroyed, which led directly to the rise of the Nazis.”
–       Nick Clooney

26 state legislators in South Carolina voted to impose the death penalty for any woman found to have had an abortion – this is in 2023 in America.
–       https://www.bmj.com

Are Australian Banks Safe?

“The banking rout has been enough to warrant a meeting of the Council of Financial Regulators (CFR), which consists of the Reserve Bank, the banking regulator APRA, the securities regulator ASIC and Treasury.

The Reserve Bank told the ABC that “Subsequent to the CFR meeting on 10 March, CFR members met to discuss the resolution action announced by United States authorities in relation to Silicon Valley Bank.”

“APRA, in consultation with CFR agencies, will continue to closely monitor the situation through its intensive supervision of the Australian banking system, which remains strongly capitalised and highly liquid,” the CFR Quarterly Statement released on Wednesday said.

Speaking on the collapse of Silicon Valley Bank, Treasurer Jim Chalmers said: “We are closely monitoring the situation and potential impacts for Australia caused by the collapse of the Silicon Valley Bank in the US.”

“In seeking preliminary advice we are aware that some Australian firms have been impacted and we’re working closely with our regulators as well as the tech sector to better understand the implications for the industry as the situation evolves,” he said.”

–       David Taylor, ABC News, 16 March 2023

Will the Reserve Bank of Australia Stop Raising Interest Rates?

There is talk in economic circles that the RBA may halt their severe cycle of successive interest rate rises on the back of the bank collapses in the United States. The falling rate of the bond market and the fears around hundreds of mid-tier banks in the US has the financial world on tenterhooks.

“NAB’s chief economist Alan Oster says the Australian financial markets are now betting the RBA will cut the cash rate by 0.25 percentage points by November.
“I think markets are overdoing it,” he said.”

–       David Taylor, ABC News, 14 March 2023

Australian Start Ups Impacted by the Collapse of Silicon Valley Bank

Australian start-ups in the tech sector have been hit by the collapse of Silicon Valley Bank (SVB). SVB was one of the most important banks in the tech sector for startups and its presence will be sorely missed in the short to medium term. SVB is thought to have around 50% of the startup market in the tech sector in the US. Perth based app Checkmate had their investor’s money in SVB and were in panic mode as the bank crashed. Red flags were flapping madly as businesses and depositors sought to get their money out before the doors closed. Imagine the painful irony of being in a situation as a startup of getting investor money in the millions and then losing it following a bank collapse. The reality sheets home the volatility in the financial world right now. The Checkmate founders, Rory Garton-Smith and Harry Dixon, both stated that, “Money is the lifeblood of the company. Protect your money at all costs.” Canva also has money tied up with SVB, but the majority of its cash is safely ensconced elsewhere. (Nassim Khadem, ABC News, 22 March 2023)

APRA Tracking Super Fund Exposure to Banking Crisis in US

With all the recent talk about multi-millionaires and their superannuation nest eggs it would be a crying shame if their super fund was heavily invested in SVB or any of the other effected banks in the US. In accordance with these fears APRA has asked superannuation funds to report any exposure to the growing banking crisis. Canva, and venture capital funds, Air Tree, Blackbird Ventures, and Square Peg are considered to have possible funds in this vulnerable banking sector. Super funds with investments in the tech sector could be at risk of exposure to this unfolding disaster. (Glenda Korporaal, Investment Magazine, 16 March 2023)

Central Banks Creating Money & Its Consequences

Have you heard about quantitative easing? This is the fancy name for ‘printing money’ or creating money out of thin air. The RBA did a bunch of billion dollar quantitative easing during our coronavirus pandemic period in 2020-21. The dictionary defines quantitative easing as, “the introduction of new money supply by a central bank.” How it is done, is via a central bank like the RBA purchasing government bonds from the open market. The effects of this are to put downward pressure on interest rates and the creation of new money in the system. The RBA pushes a few buttons and the accounts of commercial banks and financial institutions are credited with all these extra billions. In November 2020 the RBA pumped $100 billion into the Australian economy  via this magician’s trick. The US Federal Reserve has been pumping money into its economy for the greater part of the 21C. The Global Financial Crisis in 2008 and the Covid-19 pandemic were met economically with record amounts of quantitative easing. The Russian invasion of Ukraine compounded things even more via energy markets across the world. The supply of money has been increasing up until the current high inflationary period of 2022-23. The RBA calls this the Quantitative Tightening (QT) period. (Christopher Kent, RBA, 23 May 2022)

Is this global inflationary surge a direct or indirect result of quantitative easing (QE)?

“Over the last year, central banks have reversed out of quantitative easing programs and cumulatively raised interest rates quite a bit over a relatively short period. We will also learn a lot about the conduct of monetary policy and the effectiveness of monetary policy over the coming months.”
–       ECB’s Philip Lane in Nicholas Owen, IMF Finance & Development, March 2023

“QE is not money creation; it’s more accurately described as reserve creation. A central bank buys securities and pays for them with bank reserves (liabilities of the central bank and assets of commercial banks), thereby increasing the central bank’s balance sheet and the reserves of its member banks.
The linkage between QE and the money supply is indirect. Banks will use new reserves to create money, but only when reserves are an active constraint on lending.”
–       Chris Brightman, Research Affiliates, Jan 2015

So, the answer according to some economic experts is not in the fact of creating more money supply but in the how it is released into the economy. QE, according to them, is not inflationary because it does not flood the system with new cash but create a reserve at the backend to call upon if required. Still, John Maynard Keynes would be turning over in his grave at this, as his economic theories were all about governments pumping fiscal policy during downturns and recessions. As FDR did to get America out of the Great Depression in 1930s. Something, for the Albanese government to remember, as Australia looks likely to be heading into a RBA devised recession. Inflation fighting is the holy economic crusade and central banks in Australia, Europe, and the US will do whatever it takes to get inflation back down to that 2-3% safety margin. Inflation in Australia is at 7.4% as of January 2023.

RBA May Press Pause on Raising Interest Rates

It does look far more likely that the RBA will halt the interest rate rise procession very soon in the midst of a global economy tittering on the edge of a crisis. The thing about economics is that it emphasises that everything is connected. Our banks may be safe, but they are inextricably linked to the wider global banking system. The Australian economy is always buffeted by the dynamics occurring within the vastly bigger American economy.

What Should Australian Depositors Do?

So, what should you? Withdraw your money from the bank and bury it in the backyard? Not unless you have more than $250 000 deposited in each bank, as the federal government guarantees all funds up to that amount in Australian banks and recognised financial institutions.

“Refers to the Financial Claims Scheme (FCS) which provides protection to depositors of up to $250,000 per account-holder per authorised deposit-taking institution (ADI) (bank, building society or credit union) in the event of the ADI failing. For joint accounts, each account holder is entitled to the $250,000 guarantee.”
–       www.moneysmart.gov.au

RBA & The Bond Market

“We are currently pursuing passive QT, whereby we allow our holdings of government bonds to roll off as they mature. The next maturity of substance is $13 billion of the April 2023 Australian Government bond. Some central banks have slowed QT by reinvesting some of their maturing bonds; others have done the opposite, pushing QT along by selling bonds well ahead of maturity.”
–       Christopher Kent, RBA, 20 March 2023

“Growth in the Australian bond market over the past decade or so has been particularly prominent in the case of Australian Government Securities (AGS), where outstanding issuance increased from around 10 per cent of GDP prior to the GFC to around 55 per cent in 2022. The larger volume of outstanding issuance has supported a greater level of activity in the Australian bond market. One example of this can be seen in the market for repos, which grew from a stock of around $170 billion in 2015 to around $300 billion in 2022.”
–       Jon Cheshire & Joanne Embry, RBA, 16 March 2023

We are living in uncertain times, which reminds me of a quote attributed to the Chinese sage, Confucius. Although, how he would feel about our $368 billion nuclear submarine purchases I am not so sure. A wobbly banking sector, with pundits predicting imminent disaster on the financial front, record high cost of living pressures under inflationary storms, and a widely presumed global recession on the cards. Toss in cyber attacks and scammers everywhere you look and lay your digital footprint. The international banking crisis:  Are Australian banks safe? Apparently so, for now, but these things can spread rapidly before you know it. The boom and bust cycle, inherent within capitalism, continues unabated. You would think humanity could come up with something better by now. Economists love the unfettered movement of goods and services and sing the praises of the market. The fact that this involves flesh and blood human beings, and that there are no soft landings for those who lose their jobs, homes, and businesses, often escapes the number crunchers. Bankers, big bankers, rarely suffer because they fall under the too big to fail caveat. More bail outs of bankers will be on display for all to see, as this global banking crisis continues.

The Banker’s Song

“When I find myself in times of trouble, Mother Mary comes to me
Speaking words of wisdom, let it be
And in my hour of darkness she is standing right in front of me
Speaking words of wisdom, let it be
Let it be, let it be, let it be, let it be
Whisper words of wisdom, let it be
And when the broken hearted people living in the world agree
There will be an answer, let it be
For though they may be parted, there is still a chance that they will see
There will be an answer, let it be”
–       Paul McCartney & John Lennon

Bankers are always prepared to ‘let it be’ because governments invariably bail them out, no matter their greed or incompetence. Remember the 2008 Global Financial Crisis and every bank bar Lehman’s was bailed out. Central banks will never let another Lehman’s happen because of the damage it did to the economy. Paul McCartney, perhaps, did not know it at the time, but ‘be’ stands for banker! Mother Mary can be read as a euphemism for the Federal Reserve. The rest of us fall into the broken hearted people living in the world category and we get to suffer the indignities of economic recessions and worse.

Getting Credit During Tough Economic Times

The rising interest rates on the cash rate make borrowing money harder and more expensive. To combat inflation the RBA pushes the economy toward a recession. Individuals lose working hours and some lose their jobs, as businesses experience lean times and some go under. The consequences of this can mean these people needing to access credit to stay afloat. It might be a good idea to check your credit rating right now to see if you are a viable candidate for a loan or higher purchase if need be. Fortunately, you can request a free copy of your consumer credit file from each of the three credit bureaus every three months.




Equifax, Experian, and Illion do sound a little like the names of three of the four horsemen of the Apocalypse or their horses anyway. They are not; however, they are, indeed, responsible credit bureaus represented by very nice people, who are happy to help you.

Illion Ph. 1300 734 806
Experian Ph. 1300 783 684
Equifax Ph. 138 332

In this current climate of scammers and hackers it is highly advisable to stringently check the content of your credit file. Be on the lookout for things that shouldn’t be there in terms of activity that you did not authorise. Go over every listing, every date, and every detail with a fine tooth comb. If you are concerned that you don’t know what you should be looking for – a specialist credit repair lawyer can help. No Win No Fee. Any mistake found, any errors on your credit report must be corrected by the lenders concerned in tandem with the credit bureau. Expert legal assistance can facilitate this process if required. Your consumer credit file must be a true and exact rendition of your financial activities as they pertain to accessing credit and paying it off.

Credit worthiness can be restored. Bad credit histories can, with time and dedication, be redeemed. There are time frames for every kind of listing on your credit report. Understanding these things can go a long way toward beginning the process of redemption for your financial reputation and credit worthiness. In tough economic times you want to get your financial house in order to meet the challenges ahead.

“Non fortuna homines aestimabo, sed moribus”
–       Seneca
I do not estimate them for their fortune, but for their habits.


Brightman Chris, What’s Up? Quantitative Easing and Inflation, Research Affiliates, January 2025, Viewed 22 March 2023.

Elliott Larry, Silicon Valley Bank’s collapse will not be a one-off- a banking crisis was long overdue, The Guardian, 20 March 2023, Viewed 21 March 2023.

FDIC, FDIC acts to protect all depositors of the former Silicon Valley Bank, 13 March 2023, Viewed 22 March 2023.

Investopedia, M2 Definition and Meaning in the Money Supply, 18 December 2022, Viewed 21 March 2023.

Ireland Peter, What would Milton Friedman say about the recent surge in money growth? Monetary Policy, 2 May 2022, Viewed 22 March 2023.

Kent Christopher, From QE to QT – The next phase in the Reserve Bank’s Bond Purchase Program, RBA, 23 May 2022, Viewed 22 March 2023.

Korporaal Glenda, APRA tracking super funds’ Silicon Valley Bank exposure amid worsening bank fears, Investment Magazine, 16 March 2023, Viewed 22 March 2023.

MoneySmart, Australian Government guarantee on deposits, Viewed 22 March 2023.

Khadem Nassim, The SVB collapse ‘contagion effect’ will make it harder for startups, and more banks may fall,  ABC News, 22 March 2023, Viewed 22 March 2023.

Owen Nicholas, On Inflation’s Front Line, Finance & Development, March 2023, Viewed 22 March 2023.

Taylor Dave, ABC News, Could interest rates in Australia fall after the collapse of two US banks? 14 March 2023, Viewed 22 March 2023.

Taylor David, The market is telling us something very bad is coming, as global banking crisis deepens, ABC News, 16 March 2023, Viewed 20 March 2023.