Toxic asset purchase

A toxic asset purchase refers to acquiring financial assets that have significantly dropped in value and are seen as high-risk or difficult to sell, often due to poor underlying quality. During financial crises, like the 2008 housing crash, banks or governments may buy these assets to stabilize the economy and restore confidence. By absorbing these burdensome assets, they aim to clean up balance sheets, promote liquidity, and eventually resell them at better prices when conditions improve, helping prevent wider economic fallout.