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The financial crisis, or ‘credit crunch’ of 2008 affected all the major economies of the world.  The origins of the crisis are widely believed to have their roots in the ‘sub-prime’ mortgage market in the US, although the extent to which this caused the crisis, or whether it merely triggered it, is disputed.

In the UK, what began as a withdrawal of liquidity from financial markets in August 2007, initially claimed the Northern Rock bank before turning into a more widespread solvency crisis as several banks suffered large losses and had to be rescued. 

The most intense phase of the credit crisis was in September 2008, when the major US investment bank Lehman Brothers filed for bankruptcy. Governments and central banks significantly escalated their support efforts in response to, as the Chancellor of the Exchequer later described it, “a situation in which the world banking system was on the brink of collapse”.  Large government bail -outs follwed in a large number of countries.

Although the very worst of the credit crisis is over, and exceptional prudential measures have been put in place to make the world’s banks safer in future, specific banks remain vulnerable and several economies, notably Greece, continue to struggle to escape from their public debt burdens.

The extensive timeline contained in this Paper gives a ‘blow by blow’ account of five extraordinary years.

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