Only 10 days ago you might have thought that the banks had been fixed after the nightmare of the financial crisis in 2007-09. Now it is clear that they still have the power to cause a heart-stopping scare. A ferocious run at Silicon Valley Bank (SVB) on March 9 saw US$42 billion (S$56.4 billion) in deposits flee in a day. SVB was just one of three American lenders to collapse in the space of a week. Regulators worked frantically over the weekend to devise a rescue. Even so, customers are asking once again if their money is safe.

Investors have taken fright. Fully US$229 billion has been wiped off the market value of America’s banks so far this month, a fall of 17 per cent. Treasury yields have tumbled, and markets now reckon the Federal Reserve will begin cutting interest rates in the summer. Share prices of banks in Europe and Japan have plunged, too. Credit Suisse, which faces other woes, saw its stock fall by 24 per cent on March 15 and 16 and sought liquidity support from the Swiss central bank. Fourteen years since the financial crisis, questions are once again swirling about how fragile banks are, and whether regulators have been caught out.