• Changpeng Zhao, the CEO of Binance, recently tweeted about the banking crisis in the United States.
• Banks are often portrayed as safe, yet they can still fail when they are unable to meet their obligations.
• CZ criticized the difficulty for new banks to enter the market and the requirement to operate like failing banks, which prevents innovation and new ideas from entering the market.
Banking Crisis in US
In the wake of Credit Suisse’s crisis, Changpeng Zhao, the CEO of Binance, in a tweet on March 20, questioned the constant failures of banks and the regular, yet costly need to bail them out using taxpayer’s monies. Banks are often portrayed as safe investments but they can still fail when they can no longer meet their obligations such as was recently observed with Silicon Valley Bank (SVB).
Binance CEO’s Criticism
According to CZ Binance, despite frequent bank failures which lead to costly bailouts funded by taxpayers‘ money; it is incredibly harder for new banks with better ideas to get approved by regulatory agencies such as The Federal Reserve. This means that innovative and competitive services cannot enter into this market limiting customer service options.
JP Morgan Warning
The announcement of UBS Group merger with Credit Suisse will wipe out Credit Suisse’s additional tier 1 bonds (AT1 bonds) worth over $17 billion. JP Morgan believes this could have a ripple effect on investors and financial markets leading up to a contagion effect across sectors causing AT1 bond costs to exponentially increase in double digits.
Need For Innovation And Competition
CZ’s criticism shows that there is a need for more innovation and competition within banking sector especially since it is incredibly difficult for new banks to enter into this market while also having similar requirements as failing ones; thus preventing any kind of real progress or change from occurring through these institutions..
Conclusion
It is important for us all to be aware and cautious about banking crises in order for us not to be taken advantage of or put into precarious positions where our hard-earned money may end up being misused or worse lost due its lack of proper management or protection from financial institutions responsible for it . It is now up to us all keep an eye on these situations in order make sure we take steps towards mitigating any potential risks associated with them before it’s too late