The Global Response to 2008

Governments and central banks responded to the 2008 crisis on a scale not seen since the Second World War. In October 2008 six major central banks cut interest rates together, and by December the US Federal Reserve had cut its main rate to nearly zero. When rates could fall no further, central banks bought large amounts of bonds, known as quantitative easing, to lower long-term borrowing costs.

Governments injected capital into banks and passed stimulus packages: China announced a 4-trillion-yuan program in November 2008, and the US passed a roughly $787 billion stimulus in February 2009. At the London summit in April 2009, G20 leaders pledged about $1. 1 trillion in additional resources, much of it for the IMF. Most economists believe these actions prevented a repeat of the 1930s, though recovery was slow.

Critics argued that stimulus added to public debt and that quantitative easing raised asset prices that mainly benefited the wealthy, while others said stimulus ended too soon.