Financial crisis 2023: causes, effects and expectations.

The effects of the 2023 financial crisis are starting to be seen. Households have seen the cost of living increase (inflation), due to currency devaluation. Added to this is the price of electricity, indexed to the price of gas. The latter having experienced a sharp increase due to the war in Ukraine, European households saw their bills rise rapidly.

This complex situation has led states and central banks to take decisions to regulate inflation. However, as economist Nouriel Roubini points out, establishments are faced with a triple problem: enabling financial stability, regulating prices and maintaining growth. However, the means of some are contrary to the interests of others, and it is very difficult to achieve these three objectives at the same time.

Thus, key rates increased, which led to a decrease in the value of bonds issued by states. This loss was mainly felt in the banks, the main holders of the bonds (debt). As a result, financial institutions suffered losses of several billion dollars and were weakened. We then observed bank bankruptcies in the United States (SVB, Signature), but also in Europe (Crédit Suisse).

The case of Deutsche Bank is a little different. Indeed, the markets anticipate an economic deterioration and a recession, and the main German bank is caught in the Credit Default Swap.

Concerning French households, liquidity losses, inflation and the increase in rates have led to a reduction in real estate loans, which is paralyzing the real estate market.

The international banking and monetary system is entirely based on trust. If economic players have confidence in the markets and are calm about the future, there is no bank run (total withdrawal of all savers). On the other hand, the increase in Credit Default Swap and the economic situation of half of American banks raise fears of a collapse. In this case, contagion cannot be ruled out. Indeed, banks hold assets in other banks. In the event of bankruptcy, the entire chain suffers.

Several solutions have been put in place to protect savers and households. The French state guarantees money deposits in current accounts, savings accounts and life insurance. However, there are ceilings (100,000 euros for banks and 70,000 euros for life insurance).

The coming months are therefore important for banks, and they will have to face growing inflation, a loss of household purchasing power and a risk of recession. This is why gold becomes a strategic asset for savers. Investing in gold helps combat inflation, thanks to the monetary stability of the gold-bearing metal. In recent months, the price of an ounce of gold during the financial crisis has soared, contrary to the value of the currency. Buying gold and silver is a way to preserve your assets over the long term and diversify your portfolio.

At Gold Union you can buy gold bars and coins from a wide range of products. In addition, our customers have voted us “Best price on the market”! Make an appointment now with an advisor, in an agency or via our e-commerce site.