Governor of the Bank of Israel Prof. Stanley Fischer spoke today at the International Organization of Securities Commissions (IOSCO) annual conference in Tel Aviv. This is the first time the conference of securities regulators from around the world has been held in Israel.
Fischer said, "We have a tendency to forget the difficult moments after periods of crisis. But if we go back in time only nine months, we would see that many financial institutions were facing nationalization or collapse.
"I did not see any event with as large a global financial significance as the collapse of Lehman Brothers." Fischer added, "In every financial crisis as deep as the current one, central banks need to act in unconventional ways."
"I believe that central banks will learn the lesson that they need to from the latest liquidity crisis, and will work to prevent ahead of time the emergence of a new bubble - against the backdrop of inflationary pressures created by monetary policy, which is what everyone is afraid of."
Fischer said that inflation depends on central banks' ability to absorb the excess liquidity in the economy. He believes that they can do so.
Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2009
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