June 6, 2023
Banking International

Yellen predicts US economic growth despite banking sector turmoil

US Treasury Secretary Janet Yellen remains optimistic about the growth of the world’s biggest economy, despite concerns over a potential recession due to the recent banking sector turmoil. The collapse of Silicon Valley Bank (SVB) and Signature Bank last month created shockwaves in the industry, leading the Treasury Department and Federal Reserve to intervene to prevent further damage.

Although the situation has stabilized, analysts caution that the aftermath of the instability may persist as banks adopt stricter lending standards, potentially reducing credit access for households and businesses.

Despite concerns of a potential recession due to recent banking sector turmoil, US Treasury Secretary Janet Yellen remains optimistic about the economy’s growth. However, JPMorgan Chase CEO Jamie Dimon warned that the crisis is not yet over and could be long-lasting.

Yellen pledged to monitor banking system conditions and ensure deposit safety, and said officials are prepared to take necessary measures to maintain the safety and soundness of the system for all institutions. In response to the collapse of Silicon Valley Bank and Signature Bank, US authorities announced plans to ensure customers would be able to access their deposits.

In response to recent turmoil in the banking sector, the US Federal Reserve and other major central banks launched a coordinated effort to boost lenders’ access to liquidity. Despite concerns about a possible recession, US Treasury Secretary Janet Yellen expressed confidence in the country’s economy, stating that it is expected to continue growing.

Yellen emphasized that the banking system remains sound and resilient, with strong capital and liquidity, and that recent actions are intended to reinforce these strengths and maintain public confidence.

Yellen also noted that she is committed to ensuring that all deposits are safe and monitoring banking system conditions, and that officials are prepared to use all necessary tools to keep the system safe and sound, regardless of the size of institutions involved.

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