The collective noun for a group of central bankers, it transpires, is a “chorus”. In harmony this week, they reduced interest rates in the UK, the US, the eurozone, Canada, Switzerland, China, Japan, South Korea and Taiwan. This welcome move reflects slowdowns in the “real” global economy. Policymakers, however, must remember that the big freeze is a financial phenomenon. Until they resolve the banking crisis, anything else they do to revive their flagging economies will, at best, be palliative measures.

The credit squeeze is a crisis of confidence. As house prices fell, banks made losses as borrowers defaulted on their mortgages. Thanks to the proliferation of securitisation and derivatives, this burden has been spread far and wide. It was – and still is – unclear which banks are affected and by how much. Banks do not know which among them are trustworthy and so are still not lending to one another, prompting central banks to step in and lend to them themselves to prevent widescale collapse.