Even for businesses whose fundamentals remained intact, the massive constriction of liquidity could easily have been life-threatening, with a prolonged liquidity shortage escalating into a solvency problem. The massive amount of liquidity that the reversal of the monetary policy stance infused into the system helped to avert that possibility. Fiscal policy also contributed, as was displayed in Slide 2.
As indicated earlier, the process of fiscal consolidation that preceded the crisis had put government finances in relatively good shape. In doing so, it had created the capacity to respond to a slowdown in private demand, particularly investment, by quickly ramping up public spending.