ABSTRACT
Financial markets seized up and with them global goods markets shuddered. Liquidity, something that had been plentiful, perhaps too plentiful in recent years, became frightfully dear. Global trade and industrial production fell at a pace similar to that of the Great Depression. Global financial institutions were shaken and, in their newly found caution, are at the heart of a process of de-leveraging and that looks set to persist even as the global economy shows signs of healing. Policy-makers around the globe have responded to the collapse in economic and financial market activity with a breadth and depth of policy easing that is itself extraordinary. Broad public support has been given to financial intermediaries, capital infusions, liability guarantees, and access to credit lines and to foreign-exchange swaps, lower interest rates, eased regulations on provisioning standards and loss recognition, programmes to provide liquidity for distressed assets and/or to shift them to public balance sheets.
