London, September 2010

The severe global impact of the financial crisis in the United States during 2007-08 took almost everyone by surprise. Despite occasional concerns aired during the pre-crisis period, the U.S. financial system was widely perceived to be fundamentally sound and well-regulated.

However, starting with the collapse of the U.S. subprime mortgage market in late 2007, and particularly in the aftermath of Lehman's demise in late 2008, the crisis spread globally. Liquidity dried up, cross-border capital flows reversed abruptly, and world trade dropped sharply. In a truly systemic manner, the effects of a shock in one corner of the U.S. financial sector impaired global economic and financial activity in a lasting way.

Ends --

Download here:

Attachments:

IMFearlywarning

3545 Kb