But differently from the crisis in 1763, the determined actions of central banks prevented the destructive downward spiral of abrupt deleveraging, fire sales and ultimately deflation. The ECB, and indeed all major central banks, reduced its policy rates to unprecedented lows.
Banks directly supervised by the ECB have built up strong capital positions in recent years, with a Common Equity Tier 1 (CET1) ratio of 14.3% at the end of 2018 compared with 11.3% at the end of 2014, and have substantially reduced non-performing loan ratios.