discovered a financial system that had moved away from its traditional role of supporting trade and real investment. he would have found a financial system in which speculation and financial gambling had run rife. he would have encountered a system transformed – a system no longer managing genuine economic risks but one actually creating and assuming financial risks – risks resulting from arbitrage and intentional exposure to asset price changes. that same observer would have realised that financial liberalisation and innovation had made our economies more productive. the securitisation of assets, for example, had great potential to diversify economic risks and to manage them efficiently. but it also meant that financial institutions were able to sell loans or take them off the balance sheet, which weakened lenders ’ incentives to conduct prudent screening and constant monitoring of credit risk. so underwriting standards and lending oversight declined, and contributed to the excessive credit growth in the second half of the 1990s. in sum, the observer would have concluded that the factors that fuelled the credit and asset price boom of the past decade also created the conditions for a bust. in mid - 2007 we started to see the backlash. the start of the financial turmoil was sudden but not unexpected. the financial system as it worked over the past decade – with its flawed incentives and its overly complex products and with global imbalances as its macroeconomic backdrop – was no longer sustainable. the asset cycle turned, the weaknesses were exposed and investors suddenly lost confidence. after years of exceptional risk appetite and high profits, the pendulum swung in the opposite direction, as markets became extremely sensitive to financial risk. in september last year, the crisis escalated sharply. in particular, a major financial player collapsed, which was directly involved in about 30 large payment and settlement systems worldwide and had a balance sheet of usd 600 billion. its failure turned a large - scale crisis of confidence into a global financial panic. financial intermediaries restored liquidity buffers, tried to economise on capital and to scale down their balance sheets. they sold assets and tightened lending conditions. banks and other financial institutions drastically reduced their exposure to the risks that they had imprudently accumulated during the phase of financial euphoria. financial intermediation and loans to companies were curtailed in the wake of a forceful process of “ deleveraging ”. this was the point when important spillovers of the financial crisis set in. we saw the almost immediate spillover from the financial sector to the real economy. the credit squeeze and loss of confidence started

, and to impose transparency. fourthly, we are still today in a very difficult and very unpredictable environment. we permanently need to remain alert, and there is no place for complacency. i would have two main messages in that regard. as concerns direct government support to the financial sector, today ’ s priority is “ rapidity of execution. ” decisions that have already been taken should be implemented swiftly. this holds true, in particular, for recapitalisation, as currently only 55 % of funds earmarked for recapitalisation have been used in the euro area. in crisis times, rapid implementation is crucial. as concerns global governance, i insist on the absolute necessity to reinforce macroeconomic policy surveillance of systematically important countries and economies. the imf has to play a fundamental role in such monitoring, coupled with responsible and active peer surveillance. finally, central banks have a fundamental role in ensuring monetary and financial stability from a long - term perspective. morocco knows that it can count on the crucial contribution of bank al - maghrib, whose fiftieth anniversary we are celebrating today. the world economy can count on central banks to continue to act as anchors of stability, which are more needed than ever. the european central bank, for its part, will continue to be an anchor of stability and confidence. and i am pleased to note the recent proposals by the european commission, in line with the recommendations of the de larosiere report, to establish a european systemic risk council under the auspices of the ecb. thank you for your attention.