Which central bank's intervention helped calm markets during the 1987 Black Monday crash?

The Federal Reserve's intervention helped calm markets during the 1987 Black Monday crash.

On October 20, 1987, the day after the Dow's record percentage fall, Federal Reserve Chairman Alan Greenspan issued a statement saying the central bank affirmed its readiness to serve as a source of liquidity. The Federal Reserve also encouraged banks to continue lending to securities firms, helping reduce fears that market turmoil would become a broader credit crisis.

The response mattered because securities firms needed financing to settle trades and support market-making. If banks had sharply withdrawn credit, forced selling could have intensified. The Fed's communication therefore helped stabilize confidence even though it did not immediately erase the market's losses.

Black Monday had multiple causes, including rising valuations, computerized trading, portfolio insurance, interest-rate concerns, and international economic tensions. The Federal Reserve did not prevent the crash, but its actions helped limit the financial-system damage. The episode influenced later emergency communication and the creation of formal trading halts.