Impact of the American banking crisis on European banks

Until the disruption in the banking market, in 2023, monetary policy was considered a less important indirect factor that can lead to banking crises. In 2023, a disruption occurred, which proved exactly the opposite, namely that monetary policy can directly cause imbalances in the banking market. According to many authors, this crisis is much stronger than the one in 2008. It was caused by an aggressive increase in interest rates by the American FED (Federal Reserve System). The measure led to huge losses on government bond portfolios held by US banks. The losses influenced the emergence of fear among depositors who withdrew their money from banks and thus led to the collapse of four American banks. The imbalance in the banking market did not remain only in the United States of America but spread through a domino effect to the rest of the world, and above all to the European market. The reason for the emergence of this disorder was not only interest rates. The atmosphere in the financial sector has been tense for a long time. Covid-19, the war in Ukraine, but also the unethical behavior of certain banks are just some of the factors that contributed to the appearance of instability in the banking market. The aim of this paper is to point out the causes and consequences of the banking crisis that just started in the United States of America [USA] and spilled over to the rest of the world, but also to point out the importance of the responsible behavior of banks and the deposit insurance system in prevention and preventing banking crises.