From the start of the crisis in August 2007, central banks across the world have engaged in large-scale coordinated actions to support liquidity conditions in the global money markets. More recently, national governments have acted to shore up the capital base of individual financial institutions. Regrettably, but understandably, they did so in a largely uncoordinated way.
Given the many cross-border externalities that are involved, increased coordination of national measures is clearly desirable, be they capital injections or state guarantees. In spite of authorities’ efforts, uncertainty in the financial markets remains unusually high, and stabilizing financial systems is still our top priority. Nonetheless, it is not too soon to think about how we can prevent and mitigate future financial crises.