I propose to explore four avenues: •  The nature of the financial crisis  •  The policies implemented to address it  •  The macroeconomic outlook  •  The outlook for financial regulation  The nature of the crisis The crisis first emerged as a liquidity crisis. The first symptoms appeared as pressures on liquidity, which we can trace back to the beginning of August 2007 when serious disruptions appeared on the interbank market. More than a year later, these tensions are still present on money markets. This is demonstrated by the abnormal level of spreads, the shortening of maturities, and the contraction, or even closure, of some market segments. Through contagion, these tensions are also affecting non-financial corporations and the financing of the economy: in the United States for example, even more than in Europe, issuing of commercial paper remains very difficult. The crisis also emerged as a crisis of securitisation. Securitisation is a very old technique, which has been successfully used for 30 years for refinancing automobile loans, consumer credit, and (yes!) housing loans. For the past 10 years, however, it has also been used in more debatable circumstances, i.e. in the very short-term financing of complex and structured products that are wholly illiquid and whose value is very uncertain as it is mostly determined by theoretical models. Such structures are intrinsically vulnerable and fragile. This fragility was doubly masked by the abundance of liquidity and the actions of some market intermediaries, particularly rating agencies and monocline insurers.

Interbank markets have started to return to normal, but there is still some way to go. To this end, central banks have mobilised considerable firepower. The action taken in the past two days represents the culmination of a process that has been underway for over a year. Central banks have adjusted their operational frameworks in four different areas: First, the maturity of their facilities has been extended, to help to unfreeze the money market beyond the short-term segment. Second, the range of eligible counterparties has been broadened to allow adequate provision of liquidity throughout the system. Third, the range of assets eligible as collateral for refinancing operations has been expanded. Lastly, extremely close international coordination between the different monetary authorities is ensuring that the actions taken by each of them is part of a consistent overall strategy, while taking account of the specific features of each monetary area. These exceptional measures should greatly contribute to restoring confidence and the smooth functioning of money markets. All in all, combined with the coordinated cut in policy rates on 8 October, they are now enabling European banks to obtain short-term refinancing at a rate that is 120 basis points below that of just 10 days ago. Governments are also now intervening to support banks' solvency and resilience. Thanks, in particular, to France's leading role, Europe is organising itself. Since the Paris Declaration issued by the member countries of the euro area, Europe has a sound and consistent action plan. It is already being applied and comprises three main aspects.