The head of the US central bank, Federal Reserve Chairman Ben Bernanke, has said the recession could be over as early as the end of 2009 if the banking system is stabilised. Bernanke told the Council on Foreign Relations the key is how quickly and how aggressively that is done: “In the near term, governments around the world must continue to take forceful and, when appropriate, coordinated actions to restore financial market functioning and the flow of credit.”
He added: “At the same time that we are addressing such immediate challenges, it is not too soon for policy-makers to begin thinking about the reforms to the financial architecture, broadly conceived, that could help prevent a similar crisis from developing in the future. We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components.”
Bernanke said regulation of banks alone was not “sufficient” and he stressed that major financial institutions would not be allowed to fail given the fragile state of financial markets and the global economy.