What a difference six months can make – especially if they are the six months in which governments round the world have injected some £5,000bn implicitly or explicitly into their banking systems.
The Bank of England’s Financial Stability Review, released on Tuesday, spells out just how the scenario that it deemed possible, but unlikely, last April, has come to pass. Six months ago, the Bank believed that credit markets had become too pessimistic, for instance, about the scale of defaults on US subprime mortgages and predicted that there would be a recovery in confidence and risk appetite over the next few months.
