Moreover, the severity of the crisis has been exacerbated by a corrosive feedback loop between the financial and the real sectors of the economy, which has, to some extent, undermined policy-makers' efforts to address the situation.
Specifically, a disfunctioning of financial markets has reduced economic activity while the weakening of activity has, in turn, impacted on the capital position of the financial sector and, thus, its ability to provide credit to enterprises and households. 2  BIS Review 63/2009  Policy responses The policy responses, in both advanced and emerging-market economies, to the crisis have been rapid, bold, and unprecedented.