Black Monday was the 1987 market crash that led Federal Reserve chairman Alan Greenspan to issue a famous liquidity-support statement.
On October 20, 1987, the day after the Dow’s record percentage fall, Greenspan stated that the Federal Reserve was ready to serve as a source of liquidity to support the economic and financial system. The statement reassured markets that the central bank would help preserve the flow of credit without promising to maintain stock prices.
The Federal Reserve also encouraged banks to continue lending to securities firms. This response is widely regarded as an important reason the financial system avoided a deeper breakdown after the crash. The market remained volatile, but the Dow began recovering soon afterward and the broader economy did not enter a depression.
Greenspan’s response helped establish a pattern in which central banks communicate quickly during major financial stress. It is sometimes described as an early example of the “Greenspan put,” although that later phrase refers more broadly to expectations that the Federal Reserve might respond to severe market declines.