The great financial crisis that hit the United States of America in 2007 quickly spread to the rest of the world including Europe. It was driven by a large number of subprime loans that banks gave out regardless of the risks and unrealistic prices of real estate. In these situations the value of real estate was smaller than the loans that the banks allowed, therefore financial institutions with a large share of risky loans were hit with great illiquidity. As banks would mutually trade securities with the goal of improving liquidity, the crisis soon spread to the rest of the financial sector. There after the crisis spread to the real sector, the mistrust of investors grew, as did the prices of raw materials, energy, gold therefore the Swiss franc exchange rate became the safest currency during the crisis. The recession first hit the United States of America and not long after that Europe. The consequences of the crisis was a large drop in economic growth, job losses, a decline in public spending and a lack of investment. The crisis came to Croatia with a delay and the consequences were much harder and larger than expected. During 2009, there was a major economic downturn, a decline in employment and a large increase in the unemployment rate, with a special emphasis on a large number of foreign currency-denominated loans being given in Swiss francs. The decline in employment, lack of investment, decline in domestic and foreign demand and other unfavorable circumstances have made the crisis in Croatia extremely difficult. With the rising unemployment rate and the large drop in GDP put to the side, the necessity of larger social allocations forced the Government into additional foreign borrowing that was considerably more expensive than pre-crisis. Borrowings are further hampered by the fall in credit rating of the country. Unfavorable circumstances have caused the recession to last much longer than in other European countries, economic recovery and a slight growth have only occurred in 2015.