The international and European economic environment The international financial turmoil had its origins in the sub-prime mortgage market in the United States. Rising delinquencies in that market disrupted various segments of the money markets, in particular the asset-backed commercial paper market.
The drying up of liquidity in that market caused large losses and asset write-downs by a number of financial institutions which had significant exposures to complex structured finance products whose valuation was now very uncertain. More generally, international financial institutions are still reducing their leverage and the outlook for the international financial system continues to be uncertain.