chapter  5
48 Pages

Rescue Packages and Policy Responses

The GFC triggered an unprecedented response by governments all over the world. Not surprisingly, the countries most affected by the crisis, the United States and the member states of the European Union (EU), responded vigorously in their attempts to stabilize their financial systems and mitigate the effects of systemic risk. There remained a number of challenges for governments and policymakers to overcome in order to deal with the crisis effectively. First, there was the challenge of properly understanding and assessing the level of risk confronting the world’s financial markets. This would, in turn, require analysis of the underlying sources and triggers of the GFC.1