Tony Yates considers policy after Silicon Valley Bank’s collapse
The former adviser to the Bank of England on the oddities of SVB’s depositors
“SVB COMMITTED one of the most elementary errors in banking: borrowing money in the short term and investing in the long term.” This tweet was written on March 13th by Larry Summers about the recent collapse of Silicon Valley Bank (SVB). However, as the former US treasury secretary understands as well as anyone, borrowing short and lending long—so-called maturity transformation—is both the big problem with banking and the whole point of it. It’s a balancing act that SVB got catastrophically wrong.
From the March 18th 2023 edition
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