on the high-risk mortgages but Like any othe security, the bonds were used by their buyers to raise loans. However, whenUS interest rates rose and house prices fell, many borrowers couldn't pay the money back. The value of the securities dropped rapidly and the market euphoria disappeared as banks faced up to big losses. Because mortgages had been sold in combination with other products, no one could be quite sure about the distribution of risk. As a result, there was a crisis of liquidity. Banks were unwilling to lend to each other because they couldn't find out which banks were carrying most risk. The crisis spread very rapidly across markets and continents. Banks wrote off large amounts of assets and central banks had to put in billions of dollars to prevent the credit system from failing completely. Banks were taken into public ownership in the USA, UK, the Netherlands, France, Iceland and Portugal. Indeed the Icelandic government was forced to go to the lMF for a loan.