In October 2008, markets entered a downward spiral in which even sound banks were threatened by the possibility of illiquidity which could quickly turn into insolvency. The common European action plan agreed to by the EU and national authorities in October showed the ability of European and national authorities to live up to their responsibilities and to act in a swift and concerted manner.
The ECB contributed to the European action plan through a further widening of its liquidity operations as well as by issuing recommendations on recapitalisations and on the pricing of government guarantees.