Silicon Valley Bank bankruptcy and Stablecoins stability

【Author】 Galati, Luca; Capalbo, Francesco

【Source】INTERNATIONAL REVIEW OF FINANCIAL ANALYSIS

【影响因子】8.235

【Abstract】To what extent does the collapse of a commercial bank spread contagion across cryptocurrency markets? How do markets behave around bankruptcy if digital assets remain stuck within the bank and cannot be withdrawn? We use a BEKK model to examine contagion effects across major digital assets during the Silicon Valley Bank (SVB) collapse period in early March 2023. We find evidence of contagion across major stablecoins and Bitcoin. We also examine the price action when nearly all withdrawals at SVB were prohibited. We find substantial abnormal movements in stablecoin cumulative returns and traded volumes, indicating a "flight to safety"from less to more authoritative and trusted stablecoins. The implications for practitioners and policymakers are discussed.

【Keywords】Bank failure; Digital finance; Financial contagion; Volatility spillovers; Stablecoins

【发表时间】2024 JAN

【收录时间】2023-12-10

【文献类型】实证数据

【主题类别】

区块链治理-市场治理-数字货币