Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

was astonishingly low—less than $50 billion each. To backstop the sprawling banking system of the eurozone, the European Central Bank had little more than $200 billion on hand. What did this say about their assumptions about both financial risk and financial sovereignty? When asked later how he justified such minimal reserve holdings prior to the crisis, one of the most outspoken central bankers of the period paused for a minute, smiled at a point well taken and then said quite simply: “Given our long history of relations with the Fed, we didn’t expect to have any difficulty getting hold of dollars.” In other words, there was a presumption that collaboration would be forthcoming and in an emergency the Fed would provide Europe, and London in particular, with the dollars it needed. Given the scale of the offshore dollar business there could be no other answer. But for that same reason, it was also an astonishingly audacious assumption, an expectation so exorbitant that it was better left unspoken.