Twitter and Tesla CEO Elon Musk said in a tweet that he’s open to saving the crisis-hit Silicon Valley Bank and even using Twitter as a digital bank.
The sudden collapse of Silicon Valley Bank has set financial markets into a frenzy, as experts warn it may not be a one-off and brace for the next domino to fall.
Elon Musk, one of the world’s wealthiest men who already bought Twitter for $44 billion last year, was responding to a Twitter user asking if Twitter should buy SVB and become a digital bank.
The chief twit, who frequently responds to questions involving current events, wrote: ‘I’m open to the idea’ on Friday.
California regulators shuttered the bank on Friday after a run on deposits pushed it into crisis, causing the largest US bank failure since the 2008 Great Recession.
Elon Musk also bought the struggling social media app in a protracted negotiation in 2022.
He agreed in April to buy it for $44 billion but attempted to back out of the deal to get a better price.
Finally, after legal threats, he ended up going through with the acquisition and completed his takeover on October 27, 2022.
According to CNBC, had he not completed the deal, he would’ve encountered action in Delaware’s Court of Chancery.
The ripple effect has already hit similar institutions, such as New York’s Signature Bank, which saw its share price plunge 23 per cent before trading was halted when the news of SVB’s demise came in.
The share price of First Republic, the 16th largest bank in America, also crashed by 14.8 per cent and Pac West fell by 37.9 per cent.
University of San Diego finance professor Dan Roccato warned that while SVB was a niche bank, more firms were likely to encounter troubling times ahead.
He told Fox News that he didn’t think they were going back to where they were in 2008 necessarily, but that these things weren’t one-offs’, and he said that his suspicion was that they were going to see a few more of these things creep up.
Silicon Valley Bank’s massive downfall is the second-largest bank failure in US history.
Its death on Friday, which has left customers terrified of losing deposits totalling tens of billions of dollars, is eclipsed only by the failure of Washington Mutual in 2008, which had assets of $307 billion when it went into receivership.
You’ve got to hand it to Elon Musk though, he’s always brainstorming and always getting himself in the news, and he certainly likes to share every brain fart he has with the general public in the hopes everyone gasps with each declaration, but then his brain farts are more brilliant than most people’s efforts.
Elon Musk is a brainiac, although we don’t want his head to get too big, but he will probably turn this around and make a fortune, not that he needs more money, but he is always forward-thinking, but people seem to be making a God out of this mortal man, and they seemingly idolise him. Perhaps Elon could govern America because it’s obvious the democrats don’t have a clue what they’re doing.
Digital currency is what they want, but is it actually a good idea?
Presently, we’re at a bit of a crossroads when it comes to digital currency.
Physical cash is still widely circulating, and governments and banks are still yet to make the leap to issuing a central bank digital currency. At the same time, more people are living a cashless life, which is what they want, and the cryptocurrency boom is very much happening.
This means that digital currencies are under more scrutiny than ever as governments, financial authorities, global corporations, and banks that make decisions start to take them seriously as a solution for the future.
Of course, digital currency could offer a wide range of advantages over conventional methods of payment, including faster payments and greater transparency, but there are also some disadvantages to take into account as well, like security problems and how explosive some currencies can be.
Of course, digital currency offers faster transactions. There are no fees. There’s better payment tracking and better protection against fraud.
There’s better accessibility and no inflation.
So, what are the drawbacks of digital currency?
Presently, most digital currencies are decentralised, so they’re not backed by a government or central bank.
This means that they’re not stable and open to a lot of volatility, which means they can lose or gain value very quickly, and those who trade in digital currencies can possess something worth a lot in one moment, but if the value falls, they can lose value rapidly.
If CBDCs backed by banks or governments were issued in the future, then they could be a much more secure solution, but then there is the security issue because while digital currencies remove the need for storing your personal details online, the currency you own may still be vulnerable to hacks, and there have been a number of cases of companies holding currency having it stolen in an attack. Traditional banks offer a wider range of protection and compensation for those that have their funds looted.
Then there’s the lack of regulation.
The conventional financial industry is laboriously controlled, which helps to add stability and ensure there’s no improper activity.
Digital currencies presently exist outside of this regulation for the most part, which provides the user with freedom but also means they’re predisposed to more unsavoury practices.
While digital currencies are more accessible, there are also downsides. Most worrying is that this increased access can open the currency up to criminal elements looking to manipulate it for their needs, and authorities are most concerned about digital currencies being used for money laundering or to fund criminal activities.
Digital currency for the time being and most definitely in the future is a bad idea because unlike traditional forms of payment that have stood the test of time and look to have a solid future, digital currency is still new and very much in the early phases of development. Because of this, the outlook is uncertain, and there’s no guarantee that the funds you hold digitally will continue to be usable or retain value.
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