The continued closure of wholesale financial markets has been the main cause of the financial turmoil and the reason why HBOS has had to seek the protection of a merger with a stronger bank.

Almost all banks, and some other financial institutions as well, relied on such wholesale markets to finance lending well in excess of their capital and core deposit base, in the case of Northern Rock spectacularly so. When the housing market turned down sharply, first in the US and then in the UK, concern rose about the bad debts and solvency of weaker banks at the same time as each bank worried about meeting its own future financing obligations.