Explanation:
The rapid deposit runs at SVB and Signature Bank were fueled by a high concentration of uninsured deposits. These depositors, lacking deposit insurance protection, had a strong incentive to withdraw their funds quickly at the first sign of trouble, accelerating the banks' collapse and creating potential for wider contagion.
A is incorrect: While some had international operations, this was not the primary driver of their systemic risk.
B is incorrect: While social media played a role in disseminating information, the concentration of uninsured deposits was the key vulnerability.
D is incorrect: While some interconnectedness existed, these banks were not considered highly complex or deeply integrated into global financial markets like G-SIBs.
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Q.6308 The US bank' failures of 2023 prompted discussion about the systemic significance of non-G-SIBs. What specific characteristic of these banks increased their potential for systemic impact?
A
Their extensive international operations
B
Their reliance on social media for marketing.
C
Their concentration of uninsured deposits and potential for rapid deposit runs.
D
Their complex organizational structures and interconnectedness with global financial markets.