Japan’s central bank bought around 1 billion euros in funds traded on the Tokyo stock market in two days in an attempt to assuage fears of a banking crisis.
On Monday, the Bank of Japan (BoJ) acquired 70.1 billion yen (487 million euros) in exchange-traded funds, following the bankruptcies of US banks Silicon Valley Bank (SVB) and Signature Bank, as well as plans by financial regulators Americans to protect customers.
The BoJ disbursed an identical amount on Tuesday in funds traded on the Tokyo Stock Exchange, on a day in which the reference indicator, the Nikkei, closed with a fall of 2.19% due to fears of contagion in the Japanese banking sector.
This was the first time the Japanese central bank had carried out a massive purchase of ETFs (mutual funds) on two consecutive days since March 2021, a move reserved for times of financial instability, due to the risk of causing market distortions.
Three of the largest Japanese banks, Mitsubishi UFJ, Mizuho and Sumitomo Mitsui Financial Group, accumulated losses of around 10% between Monday and Tuesday on the Tokyo stock exchange, for fear of being exposed indirectly to the fall of SVB.
The Japanese banking sector today erased part of these losses, and the Nikkei index closed higher by 0.03%, with the dissipation of fears about the banking crisis and also partly due to the effect of the BoJ injections.
Headquartered in Santa Clara, California, Silicon Valley Bank specialized in the technology sector and did business primarily with start-ups.
On Sunday, US authorities announced they would ensure the removal of all deposits from the bankrupt Californian bank and said they would also allow access to all deposits from another establishment, Signature Bank, closed by the regulator.
In addition, the Federal Reserve (Fed) – the US central bank – has agreed to lend the necessary funds to other banks so that they can respond to customer withdrawals.
London announced, for its part, that the British branch of SVB had been sold to the British banking giant HSBC, for the symbolic value of one pound.
“UK SVB customers can access their deposits and banking services as normal from today,” the UK Treasury said.
The situation of the SVB illustrates the disturbances in the entire US banking system due to the tightening of monetary policy followed by the Fed.
The rise in interest rates in the United States has led customers to put their money in financial products that guarantee a higher return than checking accounts, depleting a crucial source for the new technology sector.
Source: TSF
