Silicon Valley Bank collapse explained
The fall of the Great Silicon Valley Bank Background of Silicon Valley Bank: Silicon Valley Bank was established in Santa Clara, California in 1983. Initially founded to cater to the banking needs of the emerging tech industry, SVB quickly gained recognition for its expertise and tailored financial services. As Silicon Valley flourished, so did the bank, capitalizing on the region's innovative spirit and becoming the go-to financial partner for tech startups. Why did Silicon Valley Bank collapse?? Reasons Prior to 2022, when interest rates were low, a significant portion of SVB's deposit money were put in bonds. As a result, by 2022 the bank held securities valued at $91.3 billion in its control. The value of SVB's invested bonds declined as a result of the Fed starting to raise interest rates in 2022. As the Fed raises interest rates, demand for existing bonds, which were issued at lower interest rates, decreases, resulting in a decline in the value of these bonds. Ad