Washington urged to adopt responsible fiscal policy

By WANG QINGYUN (China Daily) 10:02, March 24, 2023

The US should adopt responsible macroeconomic policies and avoid radical policy shifts that may cause serious spillover effects similar to the 2008 global financial crisis, Foreign Ministry spokesman Wang Wenbin said, as the failure of Silicon Valley Bank sent shock waves throughout the global financial market.

The collapse of the bank, which was shut down by United States regulators on March 10, marks the largest bank failure in the US since Washington Mutual in September 2008.

The Federal Reserve's fast pace of interest rate hikes over the past year is considered one of the major causes for SVB's collapse.

MarketWatch, a business news website, cited a study released earlier this month and said that "186 US banks remain vulnerable to a run on deposits like the one that doomed Silicon Valley Bank".

"We are closely following relevant developments," Wang said on Thursday.

As financial systems around the world are interconnected deeply, problems of US banks by no means impact only the US, the spokesman said.

The US has a responsibility to increase transparency, enhance communication with the rest of the world, and provide clarity on a series of widespread concerns among the world, including the exact size of the risk, steps to address it and ways to minimize its spillover, according to Wang.

The US dollar is an international currency, thus the US should assess with caution any potential negative spillover of its monetary policies, instead of simply anchoring the policies to its domestic economic regulation goals, the spokesman said.

Wang urged the US to take effective measures to stabilize market expectations and investor confidence, and called on relevant countries to take concrete steps to keep money safe for all clients, including foreign depositors.

China will work with other economies to enhance macroeconomic policy coordination and uphold international economic and financial stability, the spokesman said.

(Web editor: Zhang Kaiwei, Liang Jun)


Related Stories