Will other dominoes fall?

Fourteen years after the global financial crisis, banks still have the power to cause a mighty fright. Anxious depositors, investors and regulators might all be asking: will other dominoes fall? Over the past fortnight they watched aghast as three midsized American banks failed and Credit Suisse, a 167-year-old Swiss bank, suffered a run that ended with its forced marriage to UBS. On March 24th the stock prices of European banks, especially Deutsche Bank, took a knock.In America, small and midsized banks are suffering from the consequences of higher interest rates, which has reduced the value of their investments and has made it likelier that depositors will flee—not just to big banks, but to money-market funds too.One question is whether the brutal crunch is nearing an end, or whether this is just the start of a drawn-out process, as in America in the 1980s, during the savings and loan crisis. Another is whether central banks can keep raising interest rates, as the Federal Reserve and the Bank of England did this week. To rein in inflation, central banks need to tighten policy. But until the banks are truly fixed, they have no choice but to take into account the dangers doing so poses to the economy. By Alice Fulwood Wall Street correspondent The Economist