Banking 101 and the SVB Collapse

The global banking system thrives because of the unwritten social contract that exists between banks, their investors, and clients (individuals, businesses, and institutions). The banking system relies on the willingness of its customers to understand that loans (assets) are supported by deposits (liabilities) and that the predictability and reliability of the relationship between assets and liabilities is what keeps the doors of the bank open. Said differently, the entire system relies on investor and depositor confidence.