European Economy. Quarterly report on the euro area 2008.

Abstract

The most serious crisis to affect the international financial system since 1929 is unfolding before our eyes as this edition of the Quarterly Report of the Euro Area goes to print. Banks have lost confidence and all but stopped lending to each other. The decline in confidence has driven once renowned financial institutions in both the US and in Europe into bankruptcy. Since the crisis erupted in August 2007, the international financial system has been in the throes of a profound transformation – a process which has accelerated dramatically in recent weeks. International banking today looks quite different than it did just a few weeks ago. And we still do not have a clear idea of what it will look like tomorrow.