The Financial Crisis in Europe: Evolution, Policy Responses and Lessons for the Future

Abstract

This article provides an account of the development of the financial crisis in western Europe, primarily from a country-level and banking sector perspective, from 2007 to the spring of 2009. Measures enacted by governments and central banks to deal with impaired bank assets, recapitalize or otherwise resolve troubled banks, and inject liquidity into the banking system, are described. The article examines the longer-term policy lessons from the crisis, and considers a range of reform proposals aimed at creating a more secure and stable financial system.