Events since summer 2007 have tested global financial stability. What began with securities linked to US subprime mortgages has spread to affect to a much broader range of markets. Public authorities and market participants, worldwide as well as in the EU, have been preoccupied since the market turbulence arose with understanding the factors that have driven market developments and considering appropriate responses. The EPFSF briefing paper considers the underlying causes of the market turmoil, and what factors have amplified it. It also examines the policy issues that have arisen, what responses have emerged, and what the next steps are likely to be. For further information please refer to the EPFSF Briefing Paper