Argonautica

It is often claimed that banks benefit from higher interest rates, but this is true only if they can increase the yield on their assets faster than the cost of their funding (predominantly deposits) rises, without the increase in the cost of money causing credit losses in their loan books or losses in their securities portfolios. When interest rates rise banks are notoriously slow in raising their deposit rates precisely because they rely on the inertia of savers to fatten their net interest margin.

Though we are yet to see an economic recession or a significant deterioration in the credit cycle, three banks, Silicon Valley and Signature in America, and Credit Suisse in Europe, have all just failed. These institutions suffered a collective loss of confidence not just from their investors but crucially from their depositors, who transferred their savings elsewhere, but on which the banks were reliant to fund loans and other investments. Since the banks could not liquidate their assets at a fast enough pace to meet customer withdrawals, they ran out of cash, and were suddenly declared bankrupt.