On Friday last week, Silicon Valley Bank—the 16th biggest bank in the United States—succumbed to a bank run and was declared insolvent. With markets gripped by fear, the US authorities stepped in on Sunday night to guarantee customer deposits and backstop the financial system.
But why did SVB collapse? What happens next? And what are the risks to the broader financial system?
And in today’s Dumb Question of the Week: What is the difference between a bail-out and a bail-in?