Speaking in Sydney yesterday, Reserve Bank of Australia governor Glenn Stevens said: "I've observed a number of economic and financial episodes over the past 30 plus years. In just about every one of them of any significance, people have claimed it was the worst episode since the 1930s. "One of the earliest substantive pieces of research I was involved in at the Reserve Bank sought to bring some evidence to bear on the claim that the recession in 1983 was somehow comparable with the 1930s. It wasn't, of course - not even close. Almost all such claims are greatly exaggerated."But when those who lived through 2008 and 2009 say that there was the potential for an outcome every bit as disastrous as the 1930s, I don't think that is an exaggeration."Any account of the events of September and October 2008 reminds one of what an extraordinary couple of months they were. "Virtually every day would bring news of major financial institutions in distress, markets gyrating wildly or closing altogether, rapid international spillovers, and public interventions on an unprecedented scale in an attempt to stabilise the situation."It was a global panic."The accounts of some of the key decision-makers that have been published give even more sense of how desperately close to the edge they thought the system came, and how difficult the task was of stopping it going over," he said.Trained experts saved the day, Stevens among them. Of their collective work, he said: "Liquidity in most jurisdictions was ample. Central banks were, when needed, quite generous and inventive supplying it. "A point made many times was that liquidity cannot redress a solvency problem. That's true, but not providing liquidity to a stressed system will ultimately make solvency problems worse."Authorities in all jurisdictions understood the need to prevent a spiral of defaults of large financial institutions further adding to already tightened credit conditions. "In October 2008 the G7 finance ministers and central bank governors said pretty explicitly there would be no more failures of systemically important entities."Countries were prepared to use guarantees, and there was public injection of capital into banks in a number of instances."People will rightly worry about moral hazard and perpetuating 'too big to fail' and so on. That's a legitimate concern and a powerful reason for reform for the future, but it wasn't a basis for policy when facing imminent disaster."