US authorities launched emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank (SIVB.O) threatened to trigger a broader financial crisis.

After a dramatic weekend, regulators said the failed bank’s customers will have access to all their deposits starting Monday and set up a new facility to give banks access to emergency funds. The Federal Reserve also made it easier for banks to borrow from it in emergencies.

While the measures provided some relief for Silicon Valley firms and global markets on Monday, worries about broader banking risks remain and have cast doubts over whether the Fed will stick with its plan for aggressive interest rate hikes.

“We think the steps taken by the Fed, Treasury and (the Federal Deposit Insurance Corp) will decisively break the psychological ‘doom loop’ across the regional banking sector,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

“But, fairly or not, the episode will contribute to higher levels of background volatility, with investors watching warily for other cracks to emerge as the Fed’s policy tightening continues.”

Regulators also moved swiftly to close New York’s Signature Bank, which had come under pressure in recent days.

The wider efforts to avert a crisis lifted Wall Street stock futures in Asian trade on Monday, helping broader markets.

Lingering concerns about the financial sector weighed on bank shares in Asia, with Japan’s Mitsubishi UFJ (8306.T) hitting a two-month low and Singapore’s DBS (DBSM.SI) a four-month low. Hong Kong shares of HSBC and Standard Chartered pared early losses to trade near flat.

European stock markets fell 0.6% in early trade (.STOXX), while banking stocks fell just over 1%. US stock futures were higher. Asian shares outside Japan climbed over 1% (.MIAPJ0000PUS) while the blue-chip Nikkei (.N225) tumbled 1%.

The Biden administration’s intervention underscores how a relentless campaign by the Fed and other major central banks to beat back inflation is putting stress on the financial system and global markets.

Silicon Valley Bank (SVB), a mainstay for the startup economy, was a product of the decades-long era of cheap money, with unique risks that made it especially vulnerable. But as a run on the bank ensued last week, worries that other regional banks shared similarities spread quickly.

With the Fed poised to continue raising rates, investors said the financial system may not be fully out of the woods yet.

Goldman Sachs analysts said they no longer expect the Fed to raise rates by 25 basis points at its next policy meeting on March 21-22, amid the stress in the banking sector.

“What investors have to expect coming into tomorrow and beyond is that we are going to be dealing with a lot of event risk,” said Michael Purves, chief executive of Tallbacken Capital Advisors. “There are still going to be lingering questions with other regional banks.”

DEPOSITORS PROTECTED

The collapse of SVB - the largest bank failure since 2008 - sparked concerns over whether small-business clients would be able to pay their staff, with the FDIC only protecting deposits of up to $250,000.

Some 89% of SVB’s $175 billion in deposits were uninsured as of the end of 2022, according to the FDIC.

All depositors, including those whose funds exceed the maximum government-insured level, will be made whole, according to a joint statement by US Treasury Secretary Janet Yellen, Fed Chair Jerome Powell and Federal Deposit Insurance Corp Chair Martin Gruenberg on Sunday evening.

A senior US Treasury official said the actions taken would protect depositors, while providing additional support to the broader banking system, but officials and regulators were continuing to monitor financial system stability.

“The firms are not being bailed out. The depositors are being protected,” the official said.

The risk would be borne by the Deposit Insurance Fund, which has sufficient funds to do so.

Providing the systemic risk exceptions was deemed quicker than waiting for a possible buyer, the official said.