Das: The end of the 'everything bubble': Credit Suisse and SVB might be just the beginning

When other interest-sensitive assets are included, one estimate puts the loss for U.S. banks alone at $2 trillion. Globally, the total unrealized loss might be two to three times that. The fact is that higher rates and losses on securities have significantly weakened the global banking system. 

This is before loan losses. Higher rates will affect interest sensitive sectors such as real estate, non-essential consumer industries, and highly leveraged companies. Default rates are projected to rise globally, further reducing earnings and capital buffers.

...

Second, since the global financial crisis in 2008, regulatory restrictions on traditional banks have shifted higher risk or more complex lending or trading into the shadow banking system -- non-bank financial institutions including insurance companies, pension funds, mutual funds, hedge funds, family offices and specialty financiers. The Bank of International Settlements estimates that $227 trillion was held in these accounts in 2021, almost half the size of the global financial sector and an increase from 42% in 2008.

The trouble is that information about and regulation of these entities is limited. The September 2022 crisis in U.K. government bonds, triggered by liability-driven investing strategies of the British-defined benefit pension plan, highlights the potential risk here.