Wannan yanayi ya kai ga wani mummunan rikicin kuɗi cikin sauri, inda cibiyoyin kuɗi ba sa amincewa da juna. Ba da rance tsakanin bankuna ya tsaya cik. Gibin da ke tsakanin abin da Bankin Ingila ya sanya a matsayin ribar ruwa da abin da bankuna za su yi amfani da shi wajen ba wa juna rance (LIBOR) ya yi tashin gwauron zabi. Wannan ya haifar da ƙarin matsaloli domin yawancin bankuna suna karɓar rance na gajeren lokaci don bayar da rance na dogon lokaci. Idan rancen gajeren lokaci ba ya samuwa, daga ina za a samu kuɗi? Bankunan tsakiya, a matsayin masu ba da rance na ƙarshe, sun zama dole su shiga tsakani. Bankin Tarayya na Amurka da Bankin Ingila sun tilasta wa kansu samar da kuɗaɗe masu yawa ta hanyar rance na “gaggawa” domin su ci gaba da kiyaye bankunan da ke rushewa cikin sauri. Wannan matsayi kusan ba ya ƙarfafa amincewa ga bankuna ko tsarin baki ɗaya. Ba abin mamaki ba ne cewa dokar cetar bankunan Birtaniya ta baya-bayan nan ta ƙunshi tanadi na musamman don ɓoye sunayen bankunan da ke amfani da rance na gaggawa, domin a cire “kunyar” yin hakan. Wani muhimmin al'amari a rikicin kuɗin shi ne cewa bankunan da ke fuskantar faɗuwa ba za su iya samun damar raunana takardun asusunsu ta hanyar ba da ƙarin rance mai haɗari ga sauran bankuna “masu shakka”, ga masu rance na jinginar gida (a lokacin koma-baya) da kamfanonin da ke fuskantar faɗuwa ba. Wannan wata zagayayyiyar matsala ce. Saboda haka bankuna suna tara duk kuɗin da za su iya samu. Wannan ba ya taimakawa wajen samar da ci gaban kasuwanci da gwamnatoci ke fata. Yanzu bankuna suna tara kuɗi, kuma yawancin attajirai za su bi sahunsu.

This situation then rapidly led to a full blown liquidity crisis where financial institutions don’t trust one another. Inter bank lending ground to a halt. The spread between what the Bank of England set as its interest rate, and what the banks would use to lend between them ballooned (the LIBOR rate). This created further problems as most banks borrow short term to provide long term loans. If short term loans are not available who is left to get money from? The central banks as lenders of last resort had to step in. The US Federal Reserve and Bank of England have been forced to provide masses of liquidity via “emergency” loans to keeping rapidly failing banks afloat. A position which hardly strengthens confidence in the banks or the system. It is no wonder that the most recent UK bank bailout bill included special provisions to hide the names of banks making use of emergency loans in order that the “stigma” of doing so was taken away. The other key factor in the liquidity crisis is that failing banks can hardly afford to weaken their balance sheets by making more risky loans to other “dodgy” banks, mortgage holders (in a recession) and failing companies – a vicious cycle. Consequently the banks are hoarding what cash they can get their hands on. Hardly conducive to encouraging the next big business upturn the governments expect. The banks are now hoarding cash, and many of the wealthy will be following them.