Analyzing the Spillover Effect of Fed Rate Hikes and Cross-Border Capital Flows Risk using SVAR Model

In March 2023, the collapse of Silicon Valley Bank in the United States was considered the largest bank failure since the 2008 financial crisis. Behind this event, the catalyst for the collapse of Silicon Valley Bank was also the Federal Reserve's interest rate hike. Under the current impact of the Federal Reserve's tightening cycle, it not only caused systemic financial risks on a global scale, but also significantly increased cross-border capital flow risks and uncertainties in exchange rate fluctuations. With the increasing openness of China's financial sector, the continuous interest rate hikes by the Federal Reserve have exerted greater pressure on the renminbi exchange rate and cross-border capital flows. This article analyzes the spillover effects of the Federal Reserve's interest rate hikes, systematically studies their impact on cross-border capital flows, exchange rates, and asset prices, and summarizes practical pathways and feasible experiences for effectively reducing economic volatility and financial risks. The research findings will provide valuable references for domestic enterprises and policymakers in managing systemic financial risks and promoting high-level development of the Chinese economy.