Transcript

CHAIRMAN BERNANKE: During the past year the world has been through the most severe financial crisis since the Great Depression. The crisis in turn sparked a deep global recession from which we are now only beginning to emerge. As severe as the economic impact has been, however, the outcome could have been decidedly worse. Unlike in the 1930s when the policy was largely passive and political divisions made international economic and financial cooperation difficult, during the past year monetary, fiscal and financial policies have been aggressive and complementary. Without these speedy and forceful actions, last October's panic would likely have continued to intensify, more major financial firms would have failed, and the entire global financial system would have been at serious risk. We cannot know for sure what the economic effects of these events would have been, but all that we know about the effects of financial crisis suggests that the resulting global downturn could have been extraordinarily deep and protracted.

Although we have avoided the worst, difficult challenges still lie ahead. We must work together to build on the gains already made to secure a sustained economic recovery, as well as to build a new financial regulatory framework that will reflect the lessons of the crisis and prevent an occurrence of the events in the past two years.I hope and I expect that when we review developments, perhaps at another conference a year from now, we’ll be able to claim substantial progress towards both of these objectives.

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