Without them, it would have been impossible to make sense of the chaotic dynamics of global economies and financial systems at the time. In other words, nothing could have provided a better case study of the importance of Max’s work than the crisis. And it is lessons from the global financial crisis with which I want to begin. These are of course many and varied. But among the most important is also perhaps the simplest: to safeguard against systemic risk, the financial system needs to be managed as a system (Haldane (2009)). As put, this statement seems rather obvious, perhaps even tautological. Yet, pre-crisis, it was far from obvious. The orthodoxy then was that safeguarding individual financial firms was a necessary and sufficient condition for system-wide stability. This was the financial stability equivalent of the English aphorism: “look after the pennies and the pounds will look after themselves”. And so it appeared during the long pre-crisis period of stable growth and stable banks – the “Great Moderation” (Bernanke (2004)). The crisis has rewritten that orthodoxy. It revealed that the safety of individual banks was neither a necessary nor sufficient condition for systemic stability. Not necessary because, in any well-functioning system, individual banks can and should fail. Not sufficient because, in an integrated web, the chain is only as strong as its weakest link. In focussing on individual banks, policymakers had been, to coin another English aphorism, “penny-wise but pound-foolish”. That is why Great Moderation gave way to Great Recession (Gai and Kapadia (2010)).
In this second  BIS central bankers’ speeches  9  phase, some macro-prudential decision-making would naturally reside at the international, rather than national, level. (d)  Improved international liquidity assistance  This is plainly the thorniest of the issues. Fifteen years ago, then-IMF Deputy Managing Director Stanley Fischer set out the case for the IMF becoming a quasi-international lender of last resort (Fischer (1999)). His argument was that the IMF’s financial firepower had failed to keep pace with the scale of cross-border capital flows. At the time, I remember being sceptical about the feasibility and desirability of this proposal. In the period since, there has been a further dramatic ratchet up in cross-border capital flows. This has not been matched by IMF resources. The mismatch between global financial risk and global financial resources has widened. Fifteen years, and several crises on, I think it is clear that Stan was right. Ratification by the US of the 14th general review of IMF quotas would help close the gap but, by itself, would not prevent it from yawning. Various proposals for augmenting IMF resources have been put forward (Lachman (2006) and Farhi et al (2011)), but have foundered on political rocks. Partly in response, regional facilities have sprung up as a partial substitute, growing broadly to match in scale multilateral facilities. But the financial system is a global, not regional, one – indeed, increasingly so. Regional facilities can be a complement, but are no substitute, for multilateral insurance mechanisms.