News about the impending collapse of Silicon Valley Bank in the United States quickly sent shock waves around the world.

Panicked investors quickly started pulling out their money, and the repercussions were even felt in our tech scene.

Senior Herald journalist Madison Reidy tells The Front Page podcast that while a number of local companies were also caught up in the fallout, a broader disaster has been averted by the US Government.

“Janet Yellen, the US Treasury Secretary, and Fed chair Jerome Powell stepped in a with a life raft for depositors on Sunday night US time,” Reidy says.

“Very quickly, over the weekend, they came in and said we have to fix this fast. They were having crash course discussions behind closed doors in the White House. US President Joe Biden was involved and he almost came out immediately to say that depositors were going to be protected.”

Reidy explains that these swift actions helped to stave off a contagion effect that could have seen these concerns spread to other banks.

This in turn meant that companies like Rocket Lab with large deposits would still be able to access their funds despite the problems.

As things stand, Reidy says that analysts do not expect this to have an impact on the big Australian-owned banks operating here, given that their investments are quite different.

But that does not mean that New Zealanders have cruised through this financial calamity unscathed.

“The international stock market tremors certainly affected us here,” says Reidy.

“Our stock market on Monday was down about half a per cent or so, and it was down even more at the beginning of the day.”

Given the issue is still being resolved the markets could yet still face some uncertainty in the coming months.

So what does this mean in the longer term for the global economy? Are any other banks also at risk of falling over? Are we facing the prospect of another GFC? And is it really a good thing when Governments step in to help banks through a crisis?

Listen to the full episode of The Front Page podcast to hear Reidy elaborate on all these issues.

• The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. • You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.