Former chancellor Lord Darling has told of “the most scary moment” of the financial crisis which began a decade ago.
Taxpayers’ money was used to bail out banks at risk of collapse as global banks stopped lending to one another.
Customers concerned about their savings and mortgages queued outside branches of institutions such as Northern Rock.
The crisis is said to have its roots in the decision by French bank BNP Paribas to suspend three of its funds with major exposure to bonds backed by US sub-prime mortgages - it was unable to value them because the market for these products, or “securities”, had dried up completely.
BNP caused other banks, concerned by the possibility of more bad debts coming out of the woodwork, to cut back on everyday lending to each other by hiking their own interbank rates - and so began the credit crunch.
Then Labour MP Alistair Darling told the BBC he received news of a run on RBS in a shocking phone call in 2008.
“I had to go to one of these meetings of European finance ministers, and I was asked to come out and take a call from the then chairman of RBS (Tom McKillop) who said the bank was haemorrhaging money.
“Remember this was not only the biggest in the world, it was about the same size as the entire UK economy.
“I said to him, ‘How long can you last?’ And what he said to me shook me to the core. He said, ‘Well we’re going to run out of money in the early afternoon’.”
He said there would have been “blind panic” had the Government chosen not to intervene and added the biggest danger regarding a future crisis was complacency.
“In a few years’ time when institutional memories start to fade, and the people around have all gone and retired, then that’s where the risk occurs,” he said.
Lord Darling said there was no alternative to the bailout.
“If the plan hadn’t worked I honestly don’t know where you’d have gone next, because the IMF even wasn’t big enough to help out,” he said.
“I think the reason it worked was we did far more than people expected and we did it far more quickly than people expected - you can contrast that with what’s been going on with Greece over the last few years.
“If you want to really put a firewall up you’ve got to do something quite drastic.”
He said the measures worked partly because of the speed of action and because then-prime minister Gordon Brown “phoned round all his counterparts in the big economies and said ‘Look, you’ve got the same problem, you need to be doing the same thing too’.”