The banking crisis in the United States, and around the world, is far from over. While several significant bank failures have occurred this year, there are still institutions teetering on the brink of collapse, such as First Republic Bank. These events raise questions about the stability of the global financial system and the role of government intervention in the future.
The Continuing Crisis
First Republic Bank is a prime example of a financial institution still grappling with the effects of the banking crisis. Despite receiving a $30 billion infusion of deposits from larger banks, it recently reported a 40% drop in customer deposits in Q1, and its stock price has fallen by more than 90% year-to-date. If the bank were to fail, it would rank among the five largest bank failures in US history – three of which would have occurred within the last four months.
Central Banks Under Pressure
The crisis extends beyond the private sector to central banks, with countries like Argentina experiencing hyperinflation of over 100% in the past year. This has led to a significant loss of purchasing power for citizens holding pesos, demonstrating the potential for currency destruction and economic upheaval.
The Disconnect
Despite the ongoing crisis, many citizens believe that the worst has passed, lulled into a false sense of security by bank leadership and government assurances. This disconnect could be dangerous, as the banking sector is still under significant stress.
The Road Ahead
While catastrophic failure isn’t inevitable, the banking sector will likely continue to face challenges in the near future. Governments and central banks are heavily incentivized to protect depositors and prevent a full-blown bank run, but their tools are limited. As a result, it’s likely that more money will be printed to maintain liquidity in the markets (and more inflation as result).
Defi as a solution
The ongoing banking crisis has exposed the weaknesses and vulnerabilities of traditional financial systems, but it has also paved the way for innovative alternatives like DeFi. As more people recognize the potential of DeFi to offer greater security, transparency, and control over their assets, it could become the primary solution to the financial crisis at hand. While the road to recovery may be long and arduous, embracing decentralized finance as a mainstream financial tool could ultimately lead to a more stable and resilient global economy. The DeFi revolution is not only a response to the current crisis, but also a proactive approach to building a more inclusive and secure financial future for all.
Meanwhile, in the AI front
This new Paper is important. Researchers unveil a method that enables the Recurrent Memory Transformer to retain information across an astonishing 2 million tokens. This advancement allows the AI to process and remember far more data than before; for comparison, GPT-4 can handle 32K tokens while the entire Harry Potter series comprises around 1.5M tokens. The potential implications of this breakthrough are immense, as AI could now write entire novels, contribute to complex scientific research by analyzing vast amounts of data, enhance customer service by retaining years of interaction history, and even store and recall an individual’s entire life experiences. This discovery marks a significant leap forward in the capabilities of artificial intelligence.
Some asked for 6 months of pause. By then we could have a GPT4 64 times more powerful.
Yours in crypto and AI.