The collapse of the Lehman Brothers bank sent shockwaves across the globe, sparking the worst economic crisis in generations. A decade on, what lessons have been learned? And what has been done to prevent it happening again?
On 15 September 2008, US investment bank Lehman Brothers filed for bankruptcy. With the bank holding more than $6 trillion in assets, its collapse was the largest in US history. The Dow Jones shed nearly 5% – its biggest loss since the September 11 attacks. The ensuing panic on world financial markets caused the global economy to experience the deepest downturn since the 1930s – the effects of which are still being felt today. The European response to the global downturn was an unprecedented stimulus plan worth €200 billion or about 1.5% of the EU's GDP. In addition, the European Central Bank slashed interest rates to prevent the economy from sliding further. Following the Lehman's demise, European and global regulators introduced new rules requiring banks to hold more cash and rely less on borrowed money. Banks are also now submitted to regular stress tests to see how they would perform in a future financial crash. These measures spared Europe from a deeper recession and now form the foundations of a stronger and more resilient economy.