Lessons learnt

A faltering bank, this time on the U.S. West Coast,

sparked a déjà vu moment across global markets
last week as fears of a Lehman redux triggered
sharp declines in banking stocks worldwide and
saw investors make a beeline for safe haven assets
such as gold. However, over the course of four
days from Friday, regulators in the world’s largest
economy acted with alacrity to bolster public
confidence in the banking system.
The Federal Deposit Insurance Corporation (FDIC)
first took over the Silicon Valley Bank in California,
and on Sunday took control of New York-based
Signature Bank and in concert with the Federal
Reserve and the Treasury Department announced
that depositors in both the banks would be repaid
in full. Shareholders of the two banks would,
however, not be protected, regulators said.
On Monday, U.S. President Joe Biden sought to
reassure the nation and global markets that the
U.S. was committed to maintaining a resilient
banking system, and would move to
simultaneously tighten regulations for banks to
make it less likely for such failures to occur again.
While the coordinated steps have, at least for now,
restored a degree of calm in most markets, there
are lessons that have been learnt and others that
could, perhaps, be gleaned over time.
Silicon Valley Bank’s case is fairly unique. With the
depositor base comprising start-ups and venture
capitalists, mostly from the tech hub of Silicon
Valley, the customers were geographically and
sectorally concentrated. The bank had also
invested extensively in a portfolio of U.S.
Treasuries and mortgage bonds, which had as a
result of the recent sharp interest rate increases by
an inflation-battling central bank accumulated
unrealised losses that became too costly to
liquidate in a distress situation.
Signature, on the other hand, had exposed itself to
highly volatile cryptocurrencies by providing
services to those investing in digital assets. That,
along with a run on deposits, ultimately proved to
be its undoing. Blaming the Fed’s monetary
tightening as the proximate cause for the bank
failures is a case of being unable to see the wood
for the trees.
Interest rates move in cycles and all banking is
fundamentally predicated on managing the risks
associated with interest rate moves as well as
ensuring that the deposits banks accept to fund
lending are always reasonably matched with
income or holdings that could be used to meet
withdrawals.
The Reserve Bank of India’s guidelines of 2018
advising banks to create an Investment Fluctuation
Reserve is just the kind of countercyclical tool that
has relatively insulated Indian lenders from
interest rate risks. Still, the RBI must remain on
guard to ensure neither global contagion nor
management missteps threaten any local lender.
A responsive government that wants to treat this as
a matter of policy and not cede space to the courts
would act on its own to consider the right of any
two people, regardless of gender, to marry or
found a family. Legislative inaction on burning
social issues will legitimise and invite judicial
intervention.
Common Error

1.Mother advised us to not play with bad boys.

2.It can rain before evening,you should take an

umbrella.

3.If England's climate was hot,I would live there.

4.If I had known of your arrival,I would meet you at

the station.

5.He wondered if he will ever forget her.

6.If I was in your shoes, I would wait a bit.

7.The fair had been over ten days ago.

8.I saw him when he had been standing there.

9.The iron is a useful metal.

10.She is bad at the English.

6. दूसर ों क ध खा दे ना बुरी बात है |

7. उसे बहुत कुछ करना है |

8. उसने चाय बबल्कुल नही ों पी |

9. मैंने 3:00 बजे तक इों तजार बकया |

10. वह बकस बात पर झगड़ रहे थे |

Cloze Test
The victory of the Aam Aadmi Party in the recent
Municipal Corporation of Delhi (MCD) elections
has added a fresh backdrop to the.....(1)..... face-
off between the Lieutenant Governor of the
National Capital Territory and the elected
government.

1.(1)unceasing (2)unwavering
(3)undoing (4)undulating
Several Governors, who are all too eager to
......(2).......the Bharatiya Janata Party’s
politics,.....(3)....... elected Chief Ministers from
Opposition parties,but Delhi’s case is unique,
given the......(4)........executive power at the
command of the Lieutenant Governor.
2.(1)farther (2)further (3)clog (4)flag

3.(1)criticise (2)confront (3)setback (4)facile

4.(1)scarce (2)makeshift (3)big (4)vast

The most recent......(5)....... betweenChief Minister
Arvind Kejriwal and Lieutenant Governor Vinai
Kumar Saxena came ahead of the January 6
election of the Mayor and Deputy Mayor of the
MCD,.....(6)...... Mr. Saxena appointed 10
aldermen and a BJP councillor to
preside.....(7).......the polls.

5.(1)conversation (2)flashpoint
(3)fought (4)exchange
6.(1)when (2)where (3)how (4)why
7.(1)on (2)from (3)above (4)over
The AAP alleged that Mr. Saxena had......(8)....... the
tradition of appointing the senior-most councillor
as the presiding officer. It has alleged that the
aldermen appointed by Mr. Saxena ......(9).....
given voting rights in .....(10)...... of the MCD Act,
a question that remains unclarified.
8.(1)faced (2)cut down (3)blocked (4)bypassed

9.(1)was (2)had (3)were (4)have

10.(1)reference (2)violation (3)quest (4)enacting

Common Error

8.Masks must be remained(1)/ mandatory only for

the(2)/ vulnerable and in health-care
settings.(3)/No Error(4)

9.Given the very lower(1)/ number of cases and

hospitalisations, the(2)/ situation in India is no
longer cause for concern.(3)/No Error(4)

10.The lethality cannot be(1)/ predicted as

transmission(2)/happens prior to disease
onset.(3)/No Error(4)