The most significant action, however, was the 50 basis points reduction in the target federal funds rate and a further 50 basis points reduction in the discount rate by the FOMC in midSeptember. This had a pronounced impact on financial markets. Risk appetite returned, and the VIX index declined from over 31 index points to 19 index points by 21 September.
The central banks all consider that it is absolutely essential to remain aware of the fragility of the financial system and to implement the reforms we need. We would be unable to address a situation as severe as the one in September 2008 a second time.