As we try to make the financial system safer, we must inevitably confront the problem of moral hazard.

The Libor system is structurally flawed. It is a major problem for our financial system and for the confidence in the financial system. We need to address it.

The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis.

I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.

Deflation can be particularly dangerous when a financial system is shaky, with household and corporate balance sheets in poor shape and banks undercapitalized and heavily burdened with bad loans.

Among other objectives, liquidity guidelines must take into account the risks that inadequate liquidity planning by major financial firms pose for the broader financial system, and they must ensure that these firms do not become excessively reliant on liquidity support from the central bank.