Former Finance Minister Muhammad Chatib Basri discussed how the collapse of Silicon Valley Bank in the United States affected Indonesia. According to him, the impact on Indonesia’s financial sector is minimal. “Because our exposure is small,” he said during DBS Asian Insights Forum in The St. Regis Jakarta, South Jakarta on Wednesday night, 15th of March 2023.
Chatib believes that Indonesia’s financial sector is still strong and stable. According to economic experts, the impact of SVB’s bankruptcy is a financial market shock. “However, the effect will be relatively positive (for Indonesia),” he continued.
Meanwhile, the reigning Minister of Finance Sri Mulyani Indrawati stated that the recent global market conditions should have made the impact of SVB’s bankruptcy clear.
“What we need to be aware of now are the global market conditions that have occurred in the last week, including the closure of Silicon Valley Bank, a regional bank with assets of only US$ 200 billion,” Sri Mulyani said.
According to the minister, the bank is very small in comparison to the size of the US. Despite its small size, SVB, according to her, has caused a significant shock in the trust of depositors in the United States.
“As a result, the American government, which had not done the bailout before, then decided to do the bailout and guaranteed all deposits from SVB,” she explained.
What Happened to Silicon Valley Bank
Silicon Valley Bank went bankrupt on Friday, March 10th, in the early hours of the morning in the United States. The startup lender’s specialist bank declared bankruptcy 48 hours after a capital crisis.
It has been in operation since 1983 and handles banking for technology companies. SVB serves half of the technology and health insurance companies that receive government funding in the United States. As a result, SVB was among the top 20 American commercial banks with assets of up to $209 billion at the end of last year.
The failure of the California-based bank sparked panic among major venture capital firms, which reportedly advised companies to withdraw their funds. SVB was the 16th largest bank in the United States in 2022, with assets of approximately $209 billion.
Check out the other news from Social Expat to stay updated about Indonesia:
