Ranking member Sen. Tim Scott (C) (R-SC) asks questions during a hearing of the Senate Banking, Housing and Urban Affairs Committee March 28, 2023 in Washington, DC. Win McNamee/Getty Images/AFP (Photo by WIN MCNAMEE / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)
A possible financial crisis, after the collapse of Silicon Valley Bank and the crisis at Credit Suisse – which saw a government-initiated merger between it and UBS bank – as well as the prospects of other banks failing internationally, has many worried about the future.
While this does have potentially widespread ramifications for all of us, this crisis is just another in the cycle of “boom and bust”, which stretches back as far as the 19th century, according to Stuart Sterzel, chair of global telephony company Webtel-mobi Holdings Limited, writing on our pages today.
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He points out that the crises result from the boom in unsecured credit given to financial and other institutions and which suddenly becomes shaky when liquidity dries up.
Governments then jump in to shore up banks and companies, often riding roughshod over existing laws and regulations to do so.
The existing global financial system cannot be instantly scrapped – it still works for many – but it needs to be supported until it can gradually be replaced, argues Sterzel.
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If we do not do so, we will continue to lurch from one crisis to another, ad infinitum, he says. The world needs financial security as much as it needs peace.
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