The Great Financial Crisis (aka Great Recession) was a period from mid 2007 through 2009 where markets took a significant downturn. This was brought on, in large part, due to a collapse in the United States housing market.
Due to the excess leverage in the system, when real estate prices collapsed, securities such as mortgage backed securities fell in value. This caused ripples throughout the financial system as much of the collateral in the system suddenly turned bad.
The effects were so bad that many banks around the world had to be bailed out by their governments. There was also pain suffered in other financial institutions. In the United States, both Bear Stearns and Lehman Brothers, two historic investment banks, went under.
As a result, it was speculated that Bitcoin was developed by an anonymous individual or group going by the name of Satoshi Nakamoto. This uses blockchain technology and is designed to alleviate a similar financial collapse. The jury is still out on that one.
At the core of the Great Financial Crisis was the Eurodollar System, also known as the Wholesale Banking System. This is comprised of international banks and financial institutions. They engage in both bilateral and trilateral lending transactions. It is estimated that 90% of global trade is funded through this avenue.
Many point to the subprime mortgage crisis as the cause. The challenge with this viewpoint is the fact that, in terms of dollars, it was not big enough to cause global system risk. Thus, it had to be brought on by something much larger.
The Eurodollar System operates using collateral. This means that institutions are most concerned about liquidity, not so much about credit worthiness. Under normal conditions, this was no problem since most markets had a degree of liquidity that could be counted upon.
What causes a stir was when this turned sour. As the mortgage backed securities because non-liquid, their valuation came into question.
This set off a turn of events that ultimately led to the collapse of the entire global economy. At the same time, the financial system took a hit, only being saved when institution such as the U.S. Treasury stepped in.