BIS Review 49/2009  3  as well as to the commercial and residential property sectors. Moreover, financial markets – despite recent positive developments in equity markets worldwide – remain vulnerable to swings in investor confidence and risk aversion, which could adversely affect liquidity and asset prices in some markets. Against the background of these very difficult conditions, significant policy measures have been taken by central banks and governments in Europe to improve market liquidity and replenish capital buffers. Governments created schemes for guaranteeing new bank debt, injected capital and, more recently, provided asset relief. These measures were successful in preventing a meltdown of financial systems and they helped to bolster confidence. The Eurosystem provided important input into the design of these measures, in the form of recommendations aimed at ensuring that such measures would help to safeguard financial stability and restore the provision of credit to the private sector, while at the same time maintaining a level playing-field within the Single Market to the maximum extent possible, and also containing their impact on public finances. It is still early to accurately assess the impact of these government measures on the longerterm funding and the recapitalisation of banks as well as their effectiveness in fostering bank lending to the private sector. This is because the evidence is relatively limited, as the implementation of the measures has been gradual over the past few months.
For Norway and other countries that are dependent on exports of oil, gas and other commodities, government revenues and current account surpluses are reduced. This will most likely curb the growth of sovereign wealth funds in the near-term future. BIS Review 58/2009  1  The financial crisis dealt a heavy blow to investors all over the world, as global equity prices plummeted. International stock exchanges lost more of their value in 2008 than in any other single year in recent history. Absolute results, especially with regard to equities, were highly abnormal. An investor such as the Government Pension Fund – Global will possibly earn more in the long term because of wide fluctuations in equity values. Many investors have suffered losses on equities. As a result of this experience, required returns will be higher in the future. For investments in fixed income markets, the picture is more varied. The crisis resulted in large and unexpected fluctuations in various parts of the fixed income market. While government bonds in some countries were regarded as “safe havens”, with a subsequent surge in prices, segments of the fixed income market were hit by higher credit premiums and dwindling liquidity. The crisis presented major challenges for risk management. Historical relationships between risk factors collapsed, and liquidity was greatly reduced in most markets. Market volatility was very high in both equity and fixed income markets, and market movements were on par with the most volatile periods of the past century.