After more than a decade of global financial stability and
uninterrupted economic growth, the world economy has
been seriously impaired by a banking crisis which began
in 2007, `infecting' financial institutions across all the
industrialized countries. The crisis generated a "credit crunch" that deprived
the industries in these countries of the financial support that
they needed for continued growth. The total number of banks
that collapsed during the first two quarters of 2009 reached 45.
The global financial crisis, that could be termed as "The Crash
of 2008", was described by former Federal Reserve Bank
Chairman, Alan Greenspan, as a "Once in a century credit
tsunami". Governments in the US and Europe have responded to the crisis
by providing unprecedented levels of financial support to their
banking systems, and are considering measures to strengthen
their regulation.
Throughout the second half of 2007 and the first three quarters
of 2008, governments in the US and Europe tried to stem the
emerging panic by offering ad hoc assistance to the failing banks,
although without much success. In October 2008, the governments
were forced to adopt various steps to support the financial system.
These included: injections of capital, acquisition of stock in selected
banks, and offering guarantees on all bank lending. Despite all
these measures, confidence was slow to return, and the damage
was finally leading to a recession in 2009.
|
