Silicon Valley Bank (SVB) was recently shut down. Here’s a simplified explanation.
Tag: financial literacy
Europe’s central bank thinks it has a good plan to help countries like Greece, Spain and Italy. Those countries are struggling because they took on too much debt.
The idea is that the European Central Bank will agree to buy some of the debt.
In return, the troubled countries must agree to spend less money and to put their finances in order.
When countries lend money to other countries, they receive small payments called interest.
When a country borrows too much money, some of the people who lent the money begin to worry that they won’t get their money back. So they demand higher and higher interest payments.
This puts pressure on countries that are already having trouble paying back all the money they borrowed.
It pushes their debt even higher.