In 2008 to 2009, the European Union experienced a financial crisis. Economic growth slowed down and GDP decreased in several parts of the Union. The crisis could be attributed to the housing bubble that burst and sent banks into insolvency. Borrowing rates prior to the crisis were low, encouraging people to obtain loans to purchase homes. The housing market surged, with the prices of homes steadily increasing. However, because banks wanted to increase their capital, the credits and incomes of the borrowers were often not checked. When the borrowers were unable to pay off their loans, the banks were unable to collect the payments. This decreased their stability in the interbank markets, discouraging lending from other banks to balance their reserves. Confidence in the banks dropped and customers began to withdraw their funds due to speculation that the banks were going to fail.
             According to Pedro Gustavo Teixeira in "The Regulation of the European Financial Market After the Crisis," the financial crisis stemmed from several events of financial instability (Teixeira 2011, 9). Confidence in European banks faltered which led to bank-runs and speculation of cross-border and domestic financial institutions failing, the economic collapse of Iceland, and the sovereign debt crisis of Greece (Teixeira 2011, 9). Because of the integrated market system in the European Union, the crisis spread among the states. States began unilateral actions to protect their interests in an attempt to shield themselves from the crisis (Teixeira 2011, 10). However, their actions compromised the integrity of the single financial market. At the Paris Summit in October 2008, national leaders discussed strategies to address the financial crisis in order to "avoid that national measures adversely affect the functioning of the single market and the other Member States" (Teixeira 2011, 10). Thus began the instituting of the European Supervisory Auth...