Global Financial Crisis: Responses in the European Union Concerning Banks

Between 2007 and 2008, the effects of the global financial crisis started to become evident. Various stock markets around the world have collapsed. Some financial institutions have been bought out while others have gone under. Even the governments in some of the wealthiest countries have had to muster rescue packages to save their financial systems. Many major financial institutions in Europe have failed while others need rescuing. Rescue measures have been attempted in numerous European nations. The European Union has developed a plan which involves spending tax cuts and allegedly raising 200 billion euro to help restore business and consumer confidence, prop up employment, promote green technologies, and get their banks lending again.

The crisis apparently began when financial institutions in the United States started to fail. These failures quickly evolved into global deflation, sharp shipping reductions, and a credit crisis which resulted in declines and failures in several stock indexes in many European banks. There were large declines in equities market values and worldwide commodities were also affected by these failures. The crisis has led to financial institutions deleveraging and liquidity problems especially in Europe and United States.

The crisis in subprime mortgages also triggered this crisis, which is an incisive phase of the 2007-2008 recession. The housing boom setbacks in industrialised economies also created a ripple effect all over the world. Meanwhile, trust in the system has begun to fail and the financial scene has become more and more complex.