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U.S. Treasury Optimistic on Global Growth Amid Banking Sector Strains

The U.S. Treasury Undersecretary, Jay Shambaugh, expressed confidence in the strength and resilience of the American banking system. He also emphasized the commitment of U.S. officials to collaborate with foreign counterparts to enhance financial resilience in light of recent bank failures.

The Department of the Treasury logo
The Department of the Treasury logo

Differentiating Recent Failures from the 2008 Crisis

Shambaugh explained that the recent bank failures and developments are distinct from the 2008 global financial crisis, primarily focused on credit risk. Regulators are working diligently to bolster confidence in domestic and international liquidity.

Improved Financial System Since Previous Crisis

While speaking at the Brookings Institution think tank, Shambaugh noted that the overall financial system is now better regulated, capitalized, and more liquid than the 2008 crisis. This is ahead of this week's International Monetary Fund and World Bank meetings.

U.S. Collaboration with Other Countries for Growth

Shambaugh mentioned that U.S. officials plan to collaborate closely with other nations to communicate their policies, potential spillovers, and impacts on emerging markets and low-income countries. Despite these concerns, the baseline forecast still anticipates continued growth in the global economy.

Strengthening Financial Resilience with International Partners

The Undersecretary stated that efforts would persist in working with international partners to boost financial resilience. He acknowledged that recent events serve as a reminder to address unfinished regulatory tasks and "repair and fix any cracks in the regulatory perimeter."