banks have been remarkably flexible and open - minded in developing and implementing creative responses to the conditions that we have faced. we can identify four distinct areas where authorities have needed to act : funding liquidity pressures in interbank markets ; solvency risks facing systemically important institutions ; medium - and long - term measures to strengthen the system ; and the slowdown in the macroeconomy. each has featured a number of critical information gaps that have had to be overcome, and each has presented its own challenges in terms of international coordination. liquidity pressures were the primary focus of policymakers in the early stages of the crisis, starting in august 2007, and have remained a concern ever since. central banks understood at an early stage that they needed to act, and act quickly, given the sudden and rapid rise in the market ’ s demand for liquid funds, an asset for which they are ultimately the only source of supply. central banks initially focused on their own markets, but given cross - border confidence effects as well as the need for foreign currency liquidity in many markets, they rapidly developed a number of channels of cooperation, including coordinated policy announcements and foreign currency swap lines. after the collapse of lehman in september, the systemic nature of the crisis has manifested itself with unprecedented force. in financial markets, we have observed a rapid shift from liquidity to credit risks, from a prevalent recourse to the market and central banks to massive governments ’ intervention. responses have included varying combinations of deposit guarantees, debt guarantees, capital injections, and asset purchases. while these have varied with local conditions, the need for coordination is well understood, and work to make these responses consistent is well underway. what have been the lessons of the experiences of recent months in dealing with the liquidity and solvency problems that have buffeted financial systems? for one thing, we have learned that in this new global risk environment the speed of developments has increased dramatically and correspondingly reduced the time that authorities have for an effective response. this has further increased our reliance on preventative measures ahead of a crisis. second, we have learned that the international aspects of crisis response have become many times more important than before. the transmission of shocks across borders now happens through more diverse channels than even a few years ago. given the many international externalities involved in the measures that might be taken by national authorities, the mechanisms for coordinating crisis response need to be in place well in advance. plans need to be formulated and potential consequences must be thought through.

the financial system to fully recover and adapt to the important set of reforms implemented since the onset of the crisis, before making further changes. this would be consistent with the approach chosen by the governors and heads of supervision in their recent statement that new regulatory reforms should “ not significantly increase overall capital requirements ”. european commission, directorate general for economic and financial affairs ( 2012 ), fiscal sustainability report, european economy, no. 8 ; imf ( 2014 ), fiscal monitor, april ; lanotte et al ( 2016 ), cit. bis central bankers ’ speeches note : foreign holders, alternative definition : foreign holders excluding eurosystem and round - trip foreign portfolios and funds, i. e. securities held by foreign investors net of those held by the eurosystem ( excluding the bank of italy ) and those held by foreign individually managed portfolios and investment funds but attributable to italian investors. bis central bankers ’ speeches