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| Version 0 | Version 1 |
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| Worst crisis since 1930s says Fed | Worst crisis since 1930s says Fed |
| (10 minutes later) | |
| US Federal Reserve chief Ben Bernanke says the world is suffering from the worst financial crisis since the 1930s. | US Federal Reserve chief Ben Bernanke says the world is suffering from the worst financial crisis since the 1930s. |
| Mr Bernanke argues that the roots of the current global economic downturn stem from global imbalances in trade and flows of capital in the late 1990s. | Mr Bernanke argues that the roots of the current global economic downturn stem from global imbalances in trade and flows of capital in the late 1990s. |
| In a speech to the Council on Foreign Relations, he argues that the US and its trading partners did not do enough to redress these imbalances. | In a speech to the Council on Foreign Relations, he argues that the US and its trading partners did not do enough to redress these imbalances. |
| He also says future economic recovery depends on financial stability. | He also says future economic recovery depends on financial stability. |
| 'Chronic' imbalances | |
| Mr Bernanke says the imbalances "reflect a chronic lack of saving relative to investment in the US and some other industrial countries, combined with an extraordinary increase in saving relative to investment in many emerging markets." | |
| As a result, saving flowed into developed economies for more than a decade, despite low interest rates, he argues. | |
| Risk management systems in the private sector and government regulation then failed to "ensure that the inrush of capital was prudently invested," he says. | |
| Forceful action | |
| Mr Bernanke calls for "forceful, coordinated" action to combat the financial crisis. | |
| "Until we stabilise the financial system, a sustainable economic recovery will remain out of reach," he says. | |
| Well-capitalised financial institutions are essential for any such recovery, he adds, before reiterating the Treasury Department's determination to "take any necessary and appropriate steps" to ensure that such organisations can function properly. | |
| Mr Bernanke will be meeting other G20 finance ministers and central governors in the UK this weekend to try and agree a collective response to the economic crisis, ahead of the London G20 summit in April. |