All deposits at SVB, Signature Bank will be guaranteed by the U.S. Treasury, FDIC, and Federal Reserve in an unforeseen move

The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the U.S. Treasury all declared on Sunday that they will take “decisive actions” to boost public trust in the nation’s banking sector.

In an unified statement, the participating banks guaranteed that the federal government would honor all consumer deposits

After urging systemic risk exceptions to be applied to Silicon Valley Bank and Signature Bank, the FDIC and Federal Reserve made this choice. With this action, the Santa Clara, California-based Silicon Valley Bank might be resolved by the FDIC in a way that “completely safeguards” depositors’ money and guarantees their access to credit. The same would hold true for New York-based Signature Bank, which was shut down today by its state chartering body.

“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” said Janet L. Yellen, Secretary of the Treasury, Jerome H. Powell, and Martin J. Gruenberg in a joint statement.

There will be no protection for shareholders or some holders of unsecured debt, and the banks’ senior management has been fired. However, beginning on March 13, depositors will have access to all of their money, and taxpayers will not be responsible for any losses. A special assessment on banks will be used to recoup any losses incurred to support uninsured depositors, as required by law.

A further announcement made by the Federal Reserve Board on Sunday was that it will provide additional money to qualifying depository institutions in order to ensure that banks have the resources necessary to satisfy the needs of all of its depositors. “The U.S. banking system remains resilient and on a solid foundation,” the statement stated.

“Those changes, along with the ones we’ve made today, show our dedication to making the required preparations to protect depositors’ savings.”

The “decisive actions” to safeguard depositors’ money are a positive development, but they also serve as a shining example of the motivation behind the invention of Bitcoin. The “Chancellor on the Brink” message contained in the genesis block was a direct reference by Satoshi Nakamoto to their source of technological inspiration. This inescapable result of fiat money systems is now being seen in a new form, providing new justification for the existence of Bitcoin.

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