Given the lack of transparency of the credit risk distribution system, asymmetric information was omnipresent. It became difficult for intermediaries to distinguish good assets and counterparties from bad ones. This led banks to hoard liquidity as a protection against the risk of their own assets and counterparties becoming illiquid, rather than lending available funds in money markets.
11 Such malfunctioning of the interbank markets makes the problem immediately systemic, as all major banks depend on those markets. For central banks, there was no alternative to making sizable liquidity interventions aimed at keeping the system afloat.