Amid the hurly-burly and bewilderment of recent weeks, it has been all too easy to overlook the fact that a new order has been quietly imposing itself on the world’s financial markets.

For the turbulence of 2007 has been marked by the unprecedented coordination of policy and public statements from the Federal Reserve, the European Central Bank and a network of monetary policymakers around the world.

In fact, this summer’s correction has marked a milestone in the globalisation of central banking. The crash of 1987 was exacerbated by conflicting signals sent by monetary policymakers. During the anxiety attack of 1998 the world looked to the US Fed alone to restore confidence after the collapse of Long-Term Capital Management and the Russian Government debt default. But this time the world’s central banks have been largely in lock step. In a global marketplace more interconnected than ever before, they have needed to be.

There have been differences of style. The ECB’s Jean-Claude Trichet appears to like to talk more than the Bank of England’s Mervyn King. The Europeans not only acted first but, rather controversially, they lent at the 4 per cent benchmark policy rate, rather than offering liquidity with some modest additional penalty, as the Federal Reserve and the Bank of England have done.

Still, the message from the central bankers has been largely the same. This is because the guardians of the world’s economic prosperity have taken a similar position in addressing the dilemma they all face. Central bankers are there to fend off inflation but also to prop up stable growth.

From Frankfurt to London to Washington, monetary policymakers have shared the view that they will not succumb to the moral hazard of bailing out a few failing hedge funds and, in the process, encourage unsustainable practices in the credit markets. However they will step in when trouble in the world of arcane financial instruments appears to be leeching into the real economy.

This broad consensus has been sustained with hour-by-hour coordination. The night before the ECB made €94.8 billion in funds available earlier this month, the biggest intervention in its nine-year history, Mr Trichet and his deputy discussed the pressures on European credit markets at length with senior officials at the Fed. As the Japanese yen soared and the Australian dollar collapsed, the Australian authorities coordinated with their counterparts in Tokyo and Washington.

On Wall Street there has so far been applause for the strong but subtle assistance that Washington provided last week: financial markets are generally relieved that Hank Paulson is at the helm of the US Treasury rather than some of the clumsier Treasury Secretaries who have preceded him. Bulge bracket bankers have appreciated that the Fed was sensitive enough to concerns in the market that it chose to act, and admiring of the way it communicated with financial institutions in New York. (The Fed did not cave in to the squeals of some in the financial media who called for an immediate rate cut but lowered the discount rate by which it provides emergency lending to banks that are struggling to find funds on the interbank market.)

The one anomaly is the Bank of Japan. In the annual gatherings of central bankers, Toshihiko Fukui, the BoJ governor, has for seven years been like the kid at the fancy dress party whose parents could not afford a costume. Without a “normal” cost of borrowing rate, he has not been able to join in when monetary policymakers have coordinated rate cuts and issued shared statements on growth and inflation. Japan’s zero interest rate policy has not only become an embarrassment to Mr Fukui and Japan but a distortion of risk with destabilising consequences for economies around the world.

It seems extraordinary that the world’s second largest economy should have allowed zero interest rates to persist for as long as they did. But as long as the strategy was deemed part of saving Japan from economic despair, it appeared justifiable. The challenge that has been exposed by the unwinding of the yen carry trade is restoring the Bank of Japan to the community of central bankers.

The interconnectedness of monetary policy is no surprise in an era when investors working for New York hedge funds can borrow in yen to invest in Kiwi dollars from their desks in Mayfair. But the scale of the leverage in the credit markets, the extent of the problems in the US housing market and the unknown reach of the yen carry trade may dwarf the even the powers of the central banks. Monetary policymakers face tests in September and October as they weigh the economic impact of the volatility. But, for now, the sense of combined purpose and coordinated activity has given some grounds for confidence.

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