Market participants revised their investment decisions. The banks themselves started to fear that any of their counterparties could fail and stopped lending money to each other, causing the interbank market, which had already been under stress for months, to dry up.
In the four weeks following the bankruptcy of Lehman Brothers, the European stock exchanges plunged by around 30%, more than the total fall recorded over the previous 12 months. The threemonth Euribor spread, which measures tensions in the interbank market, more than doubled, exceeding 170 basis points. The first steps taken by the authorities to calm the markets did not succeed in restoring confidence.