[Economic Term] Bridge Bank

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Today's economic term is bridge bank.

This year, there was an article that a bridge bank was established after Silicon Valley Bank (SVB) collapsed due to a bank run.

A bridging bank refers to a bank that temporarily takes over the assets and liabilities of a financial institution subject to liquidation, performs tasks such as deposits and withdrawals, and performs follow-up measures such as mergers and adjustment of credit-liability relationships.

The advantage of the processing method using a bridging bank is that it can alleviate the shock caused by the bankruptcy of a financial institution and secure time. It is a temporary institution that disappears like the financial institution subject to liquidation once its mission is completed.

PROS

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• The bridge banking system seems to be a factor that provides peace of mind to users.
  
  

CONS

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• The establishment of a bridge bank means that it takes a considerable amount of time to process a bankrupt bank.
  
  

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