Furthermore, the shock spread across the globe through a network of leveraged international investors who moved to safe havens as soon as the business climate deteriorated. On the eve of the first weekend in May financial markets were on the verge of a global contagion risk, with systemic implications. Correlation and volatility indicators increased to levels above those reached right after Lehman Brothers’ failure.
In this context, the recent experience in Europe may illustrate how successful international cooperation can calm markets and halt contagion. To restore market confidence, the EU Member States agreed to establish a comprehensive package of measures, consisting mainly of three elements. First, it was agreed to speed up structural reforms and accelerate fiscal consolidation, especially in countries experiencing the strongest market pressures.