Collapse of financial market

If – in one fell swoop many sellers rush into a market, and – potential buyers withdraw at the same time, then the interlocking engine of supply and demand will collapse. In this case, liquidity suddenly and unexpectedly disappears from the financial market, as became clear in the financial crisis that followed the subprime crisis. In order to prevent a complete and prolonged standstill of the market, the central bank or the state must intervene in the market in such a case. – See contagion effects, purchases, central banking, domino effect, three-year tender, Elizabeth question, financial market, growth significance, financial market interdependence, financial market stability, Financial Market Stabilization Act, financial system, fear thesis, guarantee fund, good, public, credit risk, crisis, systemic, collateral crisis, credit support, extended, crisis burden-sharing program, liquidity pool, mark-to-model approach, memorandum of understanding, emergency liquidity assistance, open-mouth policy, procyclicality, quantitative easing, risk, systemic, run, stability fund, European, fuzziness, constructive, submarine effect. – Cf. ECB Monthly Bulletin, July 2011, pp. 91 et seq. (EURframework for crisis management in the financial sector), Deutsche Bundesbank Annual Report 2012, p. 97 (draft crisis management framework for distressed institutions).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/