The consequences of the remarkable events and policy developments that have led to the creation of the $700bn banking bail-out plan are by no means over. The far reaching implications of the crisis for the banking industry, capital markets, the role of government in the economy, and confidence in US dollar debt will be with us for a long time.

The most urgent issue is how to contain the destructive power of deleveraging. Financial stability must be restored to avoid a harsh economic downturn that would amplify the credit crisis. Moreover, policy must provide for orderly financing flows, especially of debt rollovers, the absence of which has forced up money market and private lending rates despite copious liquidity provision.