U.S. Treasury Secretary Janet Yellen has issued a statement that the government is considering whether “similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion”, referring to the full depositor bailout of Silicon Valley Bank and Signature Bank. Thus, effectively, government is considering whether the Federal Deposit Insurance Corporation, FDIC, would extended the deposit insurance to cover all demand deposits in the U.S. banking system. Implications of this are rather dire.
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