Policies to Address Banking Sector Weakness: Evolution of Financial Markets and Institutional Indicators

This paper reviews the impact of policies that addressed the weaknesses of the banking sector through the first months of 2009. The 2008–09 financial crisis has been deeper and wider than previous post-war crises. Large complex financial institutions (LCFIs) experienced large losses in their trading books owing to the subprime crisis in 2008. Although central bank intervention successfully capped the pressures on bank liquidity, the financial position of financial institutions continues to remain weak.