IMF Executive Director Subramanian: SVB Fiasco Is Canary in Coalmine

The video discusses the US banking sector's challenges post-COVID, highlighting a significant increase in savings and a smaller rise in loans, leading to unrealized losses due to rising interest rates. These losses represent a substantial portion of the US banking system's equity, causing stress among regional and community banks. The Federal Reserve's response involves allowing banks to borrow against securities at face value, which postpones but does not solve the problem. The video also debates the adequacy of the $250,000 deposit insurance threshold and the potential moral hazard of increasing it, emphasizing the need for the Fed to halt rate hikes to prevent further losses.

What measures has the Fed taken to address the issues faced by banks?

What concerns are raised regarding the threshold for Deposit Insurance?