The financial markets are playing a key role in the transmission of the housing downturn to the rest of the economy. In the first half of 2007, investors became concerned about the likely performance of many subprime adjustable-rate mortgages made from late 2005 through early 2007.
Such a precautionary assistance framework can be expected to support the Greek economy, by helping to reduce borrowing costs, since it will provide assurance of the Greek government’s and banks’ access to funding beyond the end of the current programme in August 2018.