Financial markets have developed in recent years so that the same financial products are sold across different financial sub-sectors – from banks to insurance companies, to securities firms, with several cross-combinations thereof. In addition, the emergence (through common ownership) of financial conglomerates that encompass the different types of financial institutions has eroded the long-standing barriers that kept these business lines apart.
This led to a sharp decline in transactions in the interbank market, where banks lend and borrow funds, as well as in the corporate bond and CP markets, where firms raise funds, and financial markets ultimately stopped functioning.