as the global code. it is, however, ultimately incumbent upon the industry to support and promote adoption of the code across the marketplace. i ’ d like to highlight a variety of initiatives underway to support this adoption. first, outreach and education regarding the code is critical and has been underway via events like this and ongoing engagement with industry associations. central bank colleagues and industry market participants here and abroad have been active in reaching out locally to raise awareness of the code. new and updated education tools are already in development to help further promote the code. as awareness permeates the market, these efforts will support better understanding and adoption of the code. second, industry market participants have expressed a desire for a mechanism, such as a public register, to make public their statements of commitment. discussions with industry suggest that multiple public registers may likely be established over time. i look forward to seeing how this work evolves. it will be important to understand how the code is being adopted across the industry. to this end, the gfxc is also developing a survey to help assess how the code is being applied following its publication. this survey can provide a baseline that we can measure against over time, and can help to assess how the code is filtering into the market, going forward. gfxc, evolution of the code and last look over the past two years, the industry has been very heavily engaged in global code efforts through the mpg and the regional foreign exchange committees ( fxcs ). the past two years have shown that the work of central banks and industry in partnership, at a global level, is productive in developing and supporting best practices. as such, while both the fxwg and mpg have fulfilled their mandate to develop the code, this spirit of central bank - industry partnership will be maintained, as will the code itself, in the future by the newly formalized gfxc. the gfxc reflects a significant expansion of cross - border and public - private sector efforts. it is a forum that brings together central banks and market participants via the fxcs — currently representing sixteen regions — to encourage collaboration and communication on fx - related issues, to exchange views on trends and developments in the fx market, and to promote and maintain the fx global code. in addition, the work to develop the code has led to the development of central bank - sponsored fxcs in new regions, some of which have already launched and others that are forthcoming. fxcs, including the one sponsored

questions and answers about the financial crisis ”. national bureau of economic research, working paper no. 15787, february. gorton, ibid. subprime “ e. coli scare ” had effectively been transmitted far and wide across financial markets. let me turn now to the interventions used to combat the financial crisis. the fed knew much less back in the autumn of 2007 than we know now about how far and wide the financial crisis was to spread and the implications this would have for the real economy. the initial response by the fed was to use its traditional liquidity tools. on august 10, 2007, the federal open market committee ( fomc ) issued a statement indicating that the discount window was available as a source of liquidity to those firms that had access to the window. a week later, the fomc cut the discount rate ( the interest rate charged on discount window loans ) by 50 basis points ( a half of a percentage point ) and extended the available term for these loans from overnight to 30 days. given that the liquidity strains were affecting many firms that did not have direct access to the discount window, a key for this intervention to be helpful was that depository institutions would pass the liquidity on to those firms that needed it the most. using the earlier forest fire analogy, it was as if the fed could not drop water directly on the burning section of the forest ; rather, it had to drop the water on an adjacent section of forest and hope that somehow the water got to where it was needed. several problems became apparent with this strategy. first, few discount loans were being taken out. there is a history of “ stigma ” associated with borrowing from the fed ’ s discount window. given the high degree of uncertainty in the financial markets in the autunm of 2007, this stigma effect likely became amplified. second, given uncertainty about their own future liquidity needs, banks developed a strong “ precautionary demand ” for liquidity. this implied that they were less willing to lend out liquidity to other financial firms. finally, it was becoming increasingly difficult to assess the credit risk associated with lending to other firms even if only for short terms. to use a medical analogy, the progression of a fever can be measured by a person ’ s temperature. the progression of problems in the interbank lending market can be measured by the spread between libor and the overnight index swap ( ois ) rates for a given term. chart 7 shows the