But those intermediaries are still rebuilding the capital and liquidity positions they need to substantially increase their participation in credit markets. As I noted, we have taken important policy steps to support financial institutions and markets and to restart the flow of credit.
Indeed, risk spreads in both short-term and long-term markets have narrowed since late last year, and equity prices, after a sharp decline earlier this year, have rebounded substantially in recent weeks. However, financial markets continue to be fragile, many risk spreads are still elevated, and investors appear to remain uncertain about the strength of some financial institutions.