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SVB collapse poses little threat to Indonesia, says government
The collapse of Silicon Valley Bank (SVB) and Signature Bank has caused a certain degree of paranoia, reminding many of the horrors of the global financial crisis in 2008.
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Police officers leave Silicon Valley Bank’s headquarters in Santa Clara, California, the United States on March 10. US authorities swooped in and seized the assets of SVB, a key lender to US start-ups since the 1980s, after a run on deposits made it no longer tenable for the medium-sized bank to stay afloat on its own. (AFP/Noah Berger)
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he collapse of Silicon Valley Bank (SVB) and Signature Bank has caused a certain degree of paranoia in the industry, but it is unlikely to bring serious consequences to Indonesia except for sentiments among investors.
SVB’s rapid downfall on Friday was the second-largest bank failure in United States history, after the fall of Lehman Brothers, which triggered the global financial crisis in 2008.
The government and the Financial Services Authority (OJK) assured that much like the 2008 financial crisis, the recent US bank failure had little connection to Indonesia, thereby it posed little threat to the country as well.
“[SVB’s collapse] would have no significant impact on Indonesia considering SVB’s transactions with Indonesian financial institutions are miniscule,” Iskandar Simorangkir from the Office of Coordinating Economic Minister expert team told The Jakarta Post on Monday.
The repercussions of this would be much less than the 2008 crisis, given that SVB “is not a systemic bank to Indonesia”, he said, but urged the Financial System Stability Committee (KSSK) and financial regulators to stay alert over the short-term impact.
Fikri C. Permana, senior economist at KB Valbury Securities, expected that SVB’s collapse could trigger a certain amount of capital outflow, as investors move their money to safe-haven assets, such as such as gold and the US dollar, rather than financial assets in emerging economies, which are perceived to be higher risk.
Fikri said that the move could be triggered if investors became risk averse due to SVB’s collapse, but this was all due to a change in sentiment, which was mainly psychological.
