<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: 🧵 MACRO THREAD ON THE FINANCIAL SYSTEM🧵
Wanted to share a quick overlook on the current financial system situation : ✔️ What are the systemic risks ? ✔️ How did it happen ? ✔️ Why is it interesting for cryptocurrency ?
Some thoughts below 👇👇
1/11
https://pbs.twimg.com/media/FrMDHsaaIAAkpA7.jpg
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: Following SVB, it is the entire US regional banking system that is being at risk by the crisis of confidence.
In 2018, the Trump administration largely exempted these banks from the strict rules implemented after the 2007 crisis (Dodd-Frank Law).
2/11
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: And these institution which are the most fragile are now facing massive withdrawals from worried clients.
Not a small thing : There are now over 4,500 regional banks in the US managing around $3 trillion in assets, or 15% of the total US banking sector.
3/11
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: 2 researchers (Douglas Diamond and Philip Dybvig) have developed models showing the fragility of banks and their vulnerability to rumors: any doubt about the solvency of an institution leads to massive withdrawals of deposits.
investopedia.com/diamond-dybrig…
4/11
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: Which is crazy in the world of information we leave in : any rumor, (false or wrong) can spread over the world in less than 48h.
So bank runs ends before any bank can have time to respond to it, no matter the source
But EU didn't deregulate so doing better, right ? 👀
5/11
https://pbs.twimg.com/tweet_video_thumb/FrMDIrAaUAAKnvU.jpg
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: Well, the Europeans guru (ESRB), warned the financial system about "the probability of extreme risk scenarios."
Inflation + geopolitical tensions + post-COVID fragility of households and businesses have led the ESRB to issue a "general warning,"
6/11
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: The first since the creation of this organization after the 2007 financial crisis.
And the bank that is currently causing concern is Credit Suisse.
As a comparison, CS today is 5 times the size of Lehman Brothers in 2007 ☠️
7/11
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: Why is it important for cryptocurrencies in general ?
Because of the impact on confidence and trust we have in the tradfi system.
Governments will always bail them out, no matter how greedy they were.
8/11
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: Blockchain can help to achieve trust by providing more transparency and accountability in our transactions.
And cryptocurrencies can serve as a store of value with finite supply vs infinite money printing.
It's gonna take time but crisis like that help to move the needle.
9/11
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<aside> <img src="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1490815890920771595/vqOjeTA5_400x400.jpg" width="40px" /> maxbrs.sol @MaxBrsNFT: The next few weeks are gonna be very interesting to understand how the rates are gonna be impacted after these events and how much money will be printed to prevent any systemic risk.
Can't tell how it's gonna impact the market short term but we're due for some volatility!
10/11
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