In turn, weak economic dynamism has further deteriorated fiscal positions and financial conditions in some European countries, leading to an even worse situation, generating an adverse feedback loop. Moreover, given increased trade and financial linkages across countries the decoupling between advanced and emerging economies disappeared.
During early December, the European Central Bank adopted powerful unprecedented policy measures, as it implemented the long-term refinancing operation program and broadened the scope of acceptable collateral. This program has averted a full-blown liquidity crisis, given that it eased rollover funding pressures on many banks.