At several points, interbank lending and other short-term funding markets, including for banks, ceased to exist for terms greater than overnight, thus making it clear that this was a shock of systemic importance. In response, central banks and governments around the world took unprecedented action to stabilize the financial system and reduce the severity of the ensuing global recession.
The Bank of Canada intervened repeatedly to provide liquidity to financial market participants to mitigate the risks of serious financial disturbances. 1  See Appendix 1: Bank of Canada Liquidity Facilities, p. 11. BIS Review 17/2010  1  Going into the crisis, banks, globally, were highly leveraged 2 and had overestimated the ability of markets to provide liquidity in times of stress.