Source: Nikkei Chinese website

Author: Takeuchi Hongwen, Nan Yilang

The sharp contraction of funds expanded during the crown disease epidemic is leading to turbulence in the financial market.The US currency supply continues to be negative compared with the same month last year, which is the first time since 1960.Rapid interest rate hikes and currency shrinkage highlight the tension of the financial system, leading to the bankruptcy of local US banks and the business crisis of the European bank.Although the emergency response of the government and enterprises has gradually stabilized the situation, the seeds of crisis still exist in the real estate market in Europe and the United States, and financial anxiety still exists.

Credit Suisse Group and UBS group recently held a shareholders 'meeting in Switzerland to report to shareholders' business mergers.The turbulence of the US and European financial systems began with the closure of the Silicon Valley Bank (SVB) in the United States and the consolidation of electricity -like rescue -like rescue of large Swiss financial institutions, and now it seems to be gradually stabilizing.The Stock 600 banking index consisting of European banking stocks on April 4th was 4%higher than before the rescue was decided on March 17.The stock price of American medium -sized banks has shown signs of bottoming rebound.

However, the senior officials of Wall Street did not relax their vigilance."The current crisis is far from over, and its impact will continue until the next few years." Jimmy Chase CEO Jimi Dimon said in a letter to shareholders.Although it is emphasized that this is different from the Lehman crisis in 2008, it is estimated that banks will become more conservative and gradually affect the real economy.

The fundamental reason for the crisis is the sharp contraction of currency supply.M2 (broad currency supply), one of the "currency stocks (currency supply)" indicators of total currency, has attracted attention.According to the Federal Reserve data, M2 converted to negative value in December 2022. This is the first time since 1960 (monthly calculated), and the data at that time can be traced back to the same month last year.The negative growth of M2 continued until February.

Europe's February M2 also decreased by 0.4%over the last month, the largest monthly decline since the euro began in 2002.European Central Bank (ECB) actively increasing interest rates is impact.

During the spread of the epidemic in 2020, the European and American governments took strong stimulus measures, and households and enterprises accumulated deposits.Since 2022, the Fed has adopted the actions of interest rate hikes and tightening currency in response to historic inflation, and absorbed excess liquidity from the market.Investors participating in the first public offering (IPO) and other excess liquidity have been hit, which is a far cause that leads to the bankruptcy of Silicon Valley Bank and the crisis of Credit Suisse Group.

The main reason for the decline of

M2 is the outflow of bank deposits.According to the Federal Reserve, the deposit of commercial banks in the United States has decreased by $ 125.7 billion in recent week.This is the decline in the ninth consecutive week.The depositer transferred their funds to the financial products with higher income, and the credit concerns of medium -sized banks were concerned that stimulated the outflow of bank deposits.As deposits continue to flow out, banks must be cautious about loans.

The negative impact on the real economy has begun to appear.In the past week, the overall loan of Bank of America has reduced $ 20.4 billion.The decline is the biggest since June 2021.Even compared with the same month of the previous year, the growth rate has slowed down.The American Manufacturing Business Confidence Index in March of the United States Supply Management Association (ISM) in March for the fifth consecutive month is lower than 50.

The next focus is the risk of the United States and European real estate industries.A large amount of loose funds flow into the commercial real estate market.The vicious circle caused by financial instability is becoming more and more vigilant.

According to data from the European Central Bank, the value of the net assets of real estate investment funds has increased more than doubled in the past 10 years, and by 2022, it will reach 103.87 trillion euros.

The European Central Bank is worried that the capital reverses through the downturn in the real estate market.As interest rates continue to rise sharply to inhibit inflation and increase interest burden, it may make it more difficult for banks to provide new loans and debt reinstatement.The European Central Bank said "there is obvious signs of vulnerability."

In the United States, 40%of commercial real estate loans were issued by banks, and 70%were issued by small and medium -sized banks, including regional banks.Kiran Leitura, a Capital Economics, warned: "(local banks are unwilling to loan) to put pressure on real estate investors' ability to raise funds."If there are a large number of real estate non -performing loans, this will lead to bank operating problems.

Many views believe that the crisis caused by currency tightening is similar to the crisis of the Savings Credit Association (SL) of the 1980s and the early 1990s.

In 1979, Walker, which became the Federal Reserve Chairman, controls inflation as the primary task, greatly increasing policy interest rates.Because of the high deposit interest rate, the reverse interest spread with investment income, the Savings Credit Association faces credit anxiety and deposit crowding.In the market that is trapped in excessive housing, loans cannot be collected.

Larry Fink, CEO of Berlaide, the world's largest investment management company, said in a letter that in the current crisis, "I don't know if there will be further (bank) closure" andIt is pointed out that "banks need to suppress loans to support their balance sheets."Even if the Lehman crisis levels can be avoided, the probability of entering decline due to unwillingness to loans will increase.It takes time to completely eliminate financial instability.