America's ticking $620 billion time bomb

 America's ticking $620 billion time bomb

Banks in the US are sitting on $620 billion of "unrealised losses' - assets that have lost value but have not yet been sold - the head of the Federal Deposit Insurance Corporation has warned, the media reported.

News of the worrying shortfall came amid the closure of Silicon Valley Bank - the biggest collapse since Washington Mutual in 2008, the Daily Mail reported.

As the government scrambles to prevent contagion, the Federal Reserve announced on Sunday night that all depositors would get their money back.

However, the revelation about the "unrealised losses' will only serve to heighten concerns about the US banking sector, the Daily Mail reports.

The ticking time bomb is due to the fact that US banks bought treasury bonds and notes when interest rates were low, which have lost value now that interest rates are rising.

When interest rates rise, newly issued bonds pay investors higher interest rates, which causes the older bonds to