The willingness of financial institutions to deal with each other broke down. The continued operation of the global financial system turned out to depend on a far larger number of individual markets and institutions than had been assumed. Liquidity bottlenecks in some arcane products and markets, such as monoline bond insurance, became suddenly obvious.
US and European financial system conditions deteriorated significantly in the second half of 2008, especially following the failure of the major US investment bank, Lehman Brothers, in mid-September. Other sizeable financial institutions in the US and Europe – including AIG, the world’s largest insurance company at the time – failed or were restructured during this  4  BIS Review 11/2009  time.