Ultimately, the crisis was ignited in August 2007 by unprecedented tensions in the interbank market, in which financial institutions lend to and borrow from one another. Following the bankruptcy of Lehman Brothers in September 2008, the financial market tensions developed into a loss of confidence across the whole economy and eventually a deep recession.
After years of benign economic developments, all policy-makers suddenly faced very uncertain circumstances. A key feature of the uncertainty generated by financial crises is that it places decisionmakers in uncharted territory. Events happen that were deemed to be almost impossible before the crisis, and were therefore difficult to forecast on the basis of statistical methods.