Collectively, they engaged in a large-scale “deleveraging” process. Banks’ intermediation was sharply reduced, and loans to companies were curtailed. A long-term trend that had brought credit risk spreads on loans extended by international financial intermediaries to historical lows was suddenly reversed. A credit squeeze ensued which took a severe toll on the real economy. III.
Key characteristics of the euro area  The ECB has moved pre-emptively and forcefully to counter the adverse consequences of the financial crisis. At all times the ECB’s response has been carefully calibrated to the structure of the euro area economy.