that commercial paper issuance by nonfinancial corporations was not declining sharply at the time nor were rates rising to unprecedented levels. but this type of data contains little information about the ability of firms to issue new paper. moreover, as the economy slowed abruptly the need to raise additional funds through new issuance increased. it was clear from our market contacts that the commercial paper market was rapidly grinding to a halt as both financial and non - financial institutions felt the need to build liquidity. the policy response was the cpff which served as a liquidity backstop to facilitate issuance of commercial paper by highly rated firms. in addition to showing how publicly available financial statistics in the absence of real time market intelligence can sometimes lead to incorrect diagnoses, these three examples demonstrate the importance of detailed information about markets in articulating the precise market failure that might justify a government intervention and the form the intervention should take given the failure. as noted above, many of the emergency liquidity facilities rolled out in the crisis were developed in a very short period of time by experts with years of experience in these various markets. all of the new facilities were designed to price the emergency liquidity such that as market stresses eased, their use would decline. this is exactly what happened. furthermore, the most convincing evidence that the facilities correctly addressed market failures related to liquidity is the fact that none of them lost any money. 19 conclusion the past few years have seen important changes in the role of central bank interactions with financial markets. some of the main lessons i take away are : published statistics and market prices only tell part of the story of developments in financial markets, at best ; beliefs of market participants and the distribution across markets matter, and information on them needs to be collected and analyzed on a frequent basis ; active operations in financial markets allow central banks to flexibly respond to unexpected events and understand market functioning issues and changes in market infrastructure. most importantly, the global financial the federal reserve established swap arrangements with the reserve bank of australia, the banco central do brasil, the bank of canada, the danmarks nationalbank, the bank of england, the european central bank, the bank of japan, the bank of korea, the banco de mexico, the reserve bank of new zealand, the norges bank, the monetary authority of singapore, the sveriges riksbank, and the swiss national bank. for further information, see the following list of faqs : http : / / www. federalreserve

information needs of policymakers. lending through these temporary liquidity facilities was fully secured, as with the standing discount window facility, and almost every facility was designed to provide a useful source of funding during stressed financial market conditions but to be an unattractive source of funding once markets returned toward more normal functioning. all of the temporary short - term lending facilities had ceased extending new credit by early 2010 and were closed, although reciprocal swap facilities with foreign central banks were restored later that year, and some longer term loans arranged under the talf remain outstanding. see the following for further information about the desk ’ s primary dealer survey, along with historical questions and aggregated responses : http : / / www. newyorkfed. org / markets / primarydealer _ survey _ questions. html. this staff unit produces an annual report reviewing open market operations and other developments influencing the federal reserve ’ s balance sheet. for a list of such reports, see as follows : http : / / www. newyorkfed. org / markets / annual _ reports. html. bis central bankers ’ speeches lessons learned on market interactions through prism of an economist from the onset of the financial crisis until earlier this year, i acted in the capacity of a research economist at the new york fed. i want to turn to some of the lessons learned as an economist trying to make sense of the crisis through economic theory and how it could be easy to misdiagnose the crisis without the multitude of interactions with financial markets that i have described. i will also apply these lessons to the current controversy about how economics should move forward after the crisis. in order to illustrate some of the lessons learned from the crisis, i offer two different perspectives : first as a research economist trying to make sense out of the initial phases of the crisis in real time and mostly failing ; and second as a central banker directly observing and trying to counteract the panic that took hold of global financial markets in september 2008. my observations will further underscore the absolute criticality of a central bank ’ s interactions with financial markets as a basis for properly diagnosing financial disruptions that threaten the economy and developing effective remedies. in an immediate response to the onset of the crisis in august 2007, the new york fed began to hold an in - depth discussion every afternoon about the day ’ s developments. these discussions involved staff from all parts of the bank and were usually led by tim geithner, the president of the new york fed at