the tool the federal reserve could have used, had it chosen, to stem the banking panics of the 1930s. ) however, our traditional tools, developed in an earlier era, were of little use in addressing panic in the shadow banking system or in the money market mutual fund industry. so, we engaged in what i call “ blue sky thinking ” – generating many ideas. most were discarded, but, crucially, some led to the development of new ways for the federal reserve to fulfill the traditional stabilization function of central banks. using emergency authority last employed during the depression, we created an array of new facilities to provide backstop liquidity to the financial system ( and, as a byproduct, coined many new acronyms ). thus, we were able to help restore the flow of credit to american families and businesses by shoring up important financial markets, such as those for commercial paper and securities backed by consumer loans. undoubtedly, researchers and scholars will devote considerable energy in the years ahead to expanding and refining the lessons this most recent crisis has provided us. i hope that some of you might contribute to that endeavor. i congratulate the center fellows whose work is also being recognized this evening and thank you, once again, for honoring me with the hamilton award.

##ber ). the historical linkages between financial stability and economic performance have been explored in great detail in recent work. for example, see carmen m. reinhart and kenneth s. rogoff ( 2009 ), this time is different : eight centuries of financial folly ( princeton and oxford : princeton university press ). see ben s. bernanke ( 2009 ), “ the supervisory capital assessment program, ” speech delivered at the federal reserve bank of atlanta 2009 financial markets conference, jekyll island, ga., may 11. critics had warned that the stress test could backfire, but as it turned out, the release of the results last may helped restore confidence in banks, and many institutions have since been able to raise capital from investors and repay the capital the government had injected. then as now, the financial and economic crisis was global, underscoring the third lesson : international crises require an international response. contemporary americans ’ impressions of the depression have been shaped by iconic photos of bread lines, hungry dust bowl migrants, and the milling crowds on wall street on black monday. we think of it as an american episode. we forget it was a truly global event. but the depth of the depression in germany exceeded that even of the united states, and the failure in 1931 of a large austrian bank, credit anstalt, was an important trigger of a wave of bank failures that affected many countries, including the united states. unfortunately, authorities then were ill - positioned to coordinate an effective international response, as years of bitter wrangling over world war i international debts and reparations had all but destroyed the mutual trust upon which coordination depends. in the recent episode, policymakers, bankers, and business people recognized that the world ’ s economies and financial systems would sink or swim together. i recall talking with bankers and business people while attending an international meeting in brazil. they told me that, in september 2008, what had been a healthy pace of business activity and lending in brazil suddenly plummeted. they described the impact of the crisis as being like that of a “ cold wind ” that appeared out of nowhere. similar stories, i am sure, can be told in many other countries. because the world ’ s policymakers understood the potentially devastating effect of the financial crisis for the global economy, they and we worked urgently to stabilize the situation. in october 2008, in an unprecedented display of coordination, six central banks – the federal reserve, european central bank, bank of england, swiss