‘Ignore’ government bond loss assessment in response to gains in US high interest rates China ‘sell’ US Treasuries

It was revealed that the spread of bank insolvency caused the financial supervisory authorities to conceal the assessment of long-term bond losses, intoxicated with the expansion of high interest rates and high returns.
The U.S. financial regulator's failure to bankrupt banks proved insufficient to prevent the bank's collapse, even after the Federal Reserve spent more than a year catching Silicon Valley banks' risky practice of ignoring long-term bond loss assessments at high interest rates.
The New York Times reported on the 19th that an official familiar with the matter said, “The Fed has repeatedly warned that banks are in trouble in 2021, and the Fed’s review of fast-growing banks has found serious weaknesses in the way it handles key risks.” “Federal Reserve Bank of San Francisco supervisors, which oversee Silicon Valley banks, have issued 'things that require attention' and 'things that require immediate attention' warnings to indicate that they are doing something wrong to ensure they have enough easy cash in case of trouble," he said. It did not fix the banking vulnerability.”
Regarding the failure of the United States, the NYT said, "The Fed's leaders assumed that higher interest rate revenues would materially help fiscal conditions as interest rates rose, but they were far from the reality." "Horizontal review" phase checks to gauge strength identified additional deficiencies but failed to act, sending shockwaves through the broader US banking system that ultimately led to full-scale government intervention to prevent the panic from spreading." .
The U.S. supervisory authority's 'high interest rate bank profits expansion', which the Korean financial industry followed as it is, is the same structure in which banks focus on technology sectors sensitive to high interest rates, and high interest rates put pressure on management. The Bank of Korea chose to stimulate the economy by freezing interest rates at 3.75%.
Silicon Valley banks expanded their holdings by holding more long-term debt that depreciated market value after the Fed raised interest rates to fight inflation, and sold those securities to raise cash to meet the withdrawal needs of tech company clients. It was exposed to huge losses and went bankrupt.
While bank collapses cause sweeping problems in the banking system at large banks that are considered systemic worldwide, the fact that in reality smaller banks can cause a lot of problems in the financial system is not what this Silicon Valley bankruptcy is. NYT pointed out.
Regarding the fact that Greg Becker, CEO of Silicon Valley Bank, was sitting in his office as a board member of the Federal Reserve Bank of San Francisco right before being declared bankrupt, the structure in which a large number of former bankers are in the bank supervisory body has become a political issue in the previous bankruptcy.
Vermont Independent Senator Bernie Sanders tweeted on the 18th, "One of the most egregious aspects of the Silicon Valley bank failure is that the CEO was on the board of the same agency responsible for regulation." By doing so, we will introduce legislation to end these conflicts of interest.”
For foreign currency reserves, the Bank of Korea invests '5.2% in cash equivalents', '72% in mid- to long-term government bonds, government bonds, corporate bonds, and asset-backed bonds', and 'fund investment 22.8%' entrusted to Korea Investment Corporation (Korea Investment Corp.) As of the end of 2021) is in operation.
China started selling US Treasury bonds it held last year at high interest rates in the US, reaching US$859.4 billion as of the end of January, and its holdings continued to decline to US$867.1 billion in December last year.
China Daily reported on the 18th that although China is the second largest holder of US Treasuries, its current holdings are at their lowest level in 12 years.
“Amid growing US government debt and ongoing geopolitical tensions, reducing US Treasury holdings is an essential element to ensure the safety of China's foreign exchange reserves,” Yang Haiping, a researcher at the Securities and Futures Institute of the Central University of Finance and Economics, told the Daily.
The People's Bank of China announced on the 20th that it would freeze its base rate and chose to maintain the status quo for 7 consecutive months. China's base rate, the LPR, is 3.65% per annum for 1-year maturity and 4.30% per annum for 5-year maturity, in August of last year It was lowered and has been frozen for 7 months in a row.
China's LPR is the average of 18 commercial banks' lending rates to prime customers. LPR with a maturity of 1 year is standard for general loans and mortgages with a maturity of 5 years.