At the crisis point of the credit crunch last autumn, policymakers faced three challenges. First, they needed to stop the panic. Secondly, they needed to recreate the conditions for economic growth. Finally, they had to take steps to ensure the disaster was not repeated.
The first of these tasks was eventually achieved, though it proved more difficult and costly than many had imagined. Policymakers were criticised both for being slow to respond to the scale of the problem and for giving too little attention to international co-ordination. But you cannot point both these fingers at once, so to speak, since the search for international co-ordination slows response times. On the whole, governments and central banks performed their daunting job pretty well. The proof of that is that the banking system, although challenged in its long-term funding and risk averse in its lending, is still functioning today. It was not certain last October that one would be able to write those words in mid-2009.
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