The recent collapse of Silicon Valley Bank (SVB) in the United States has triggered concerns about the safety of money in banks, with customers in Thailand wondering whether their cash is safe and whether they should withdraw it.
While Thailand’s Finance Minister Arkhom Termpittayapaisith insists that the troubles faced by some major US banks have had no impact on Thailand, people are still worried because a number of experts said that before the financial crisis in 2008.
According to reports, the collapse of SVB was caused by a bank run, where too many depositors tried to withdraw their money. In response, regulators guaranteed all deposits at SVB, and Signature Bank, the second and third biggest bank failures in US history, and created a program to shield other banks from a run on deposits, reported the Associated Press.
In response, the bank had to sell treasury bonds and other securities at a steep loss, which caused more people to withdraw their money, ultimately leading to the bank’s failure. Regulators took control of New York-based Signature Bank soon after, citing the need to protect depositors after too many people withdrew their money.
To prevent further financial instability, regulators have guaranteed all deposits at the two banks and created a program to help shield other banks from a run on deposits
So how safe is your money if a bank collapse?
However, the question remains: how safe is your money if a bank collapses? The answer depends on whether the bank is insured by the Federal Deposit Insurance Corp (FDIC). Nearly all banks in the US are FDIC-insured, and depositors with less than US$250,000 deposited in an FDIC-insured bank will get their money back if the bank fails. Credit unions are insured by the National Credit Union Administration.
For depositors with over US$250,000 in an individual account, the amount over US$250,000 is considered uninsured. Experts recommend moving the remainder of the money to a different financial institution. Joint accounts are insured up to US$500,000.
Caleb Silver, editor-in-chief of Investopedia, a financial media website, said…
“You shouldn’t be too concerned about your money if it’s in one of the bigger banks, and even in some of the regional banks and the credit unions.”
Silver added that there are some things you can watch out for if you’re worried about your bank closing in the future.
He reckons you need to watch the stock price of your bank, keep an eye on the quarterly and annual reports from your bank, and start a Google alert for your bank in case there are news stories about it.
“If they’re trying to raise money through a share offering or if they’re trying to sell more stock, they might have trouble on their balance sheet.”
Despite the recent uncertainty, experts don’t recommend withdrawing cash from your account. Keeping your money in financial institutions rather than in your home is safer, especially when the amount is insured.
“It’s not a time to pull your money out of the bank.”
Keeping money in a financial institution, especially when the amount is insured, is safer than keeping it at home.
Todd Phillips, a consultant and former attorney at the FDIC, reassures depositors that even uninsured depositors usually get nearly all of their money back, although it may take some time and there may be a loss of 10% to 15% of their savings.
Recent bank collapses have raised concerns about the safety of cash in banks but depositors can take comfort in the fact that nearly all banks in the US are FDIC-insured.
Depositors with over US$250,000 in an individual account should consider moving the remainder of their money to a different financial institution or opening a joint account. And despite the uncertainty, experts advise against withdrawing cash from the bank.
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