financial contagion
Crisis spreading globally
Financial contagion is the spread of economic distress from one market, institution, or country to others, like a disease jumping between hosts.
A bank failure in one country can trigger panic selling worldwide; a currency crisis in one region can destabilize its neighbors.
The term captures how interconnected financial systems transmit shocks rapidly across borders: The 2008 crisis demonstrated how financial contagion could spread from U.S. mortgage markets to European banks within weeks.
- credit crunchSevere reduction in lending
- economic recessionSustained decline in output
- bank failuresFinancial institutions ceasing operations
- lender of last resortEmergency credit source for banks
- spilloverExcess that escapes
liquidity crisis · systemic risk · capital flight · flight to safety · stress testing · moral hazard · currency devaluation · globalization · domino effect · stock market crashes · panic selling · speculative bubbles · asset bubble · sovereign debt · market volatility · herd behavior · risk appetite · counterparty
- financial crisesbank run, economic collapse, bank failure, bank failures, bank runs
financial contagionring-fencing
Protecting funds from reallocation
firewall · compartmentalization · quarantine · decoupling · circuit breakers
financial contagionfinancial stability
Sound economic standing
investor confidence · market stability · economic stability · financial health · fiscal health
financial contagionvirtuous cycle
Self-perpetuating beneficial pattern