Our predecessors continued to provide Page | 4  liquidity support to these weak failing banks, without addressing the underlying problems that led to the illiquidity and insolvency of these institutions. In short, the financial system had reached a tipping point and we could not just have assumed business as usual.
A financial institution can go bankrupt in stable financial conditions. It is only where systemic risks arise, i.e. where the financial sector as a whole may be influenced by an incident, that the situation can be described as financially unstable. The two elements of financial stability, i.e. price stability and stability of the financial sector, are closely related.