In important but poorly regulated markets, financial and real estate bubbles developed. In Europe, current account disequilibria – and to a lesser extent fiscal disequilibria – were growing. BIS central bankers’ speeches  1  We all know what happened later. Indeed, there have been critical moments when the financial system of the advanced economies, maybe of the whole world, was threatened with meltdown.
In this situation central banks reacted fast and forcefully by using conventional and unconventional instruments. With regard to the financial system, a fair amount of stabilization has been achieved. But we still see major challenges for the banking sector, and – especially in Europe – we still see a struggling real economy and overstretched public finances.