By Greg Robb, MarketWatch WASHINGTON (MarketWatch) -- Central banks around the world stand ready to take additional actions as needed to restore financial market stability and ease the global credit crunch, Federal Reserve Board Chairman Ben Bernanke said Friday. "Policymakers will remain in close contact, monitor developments closely, and stand ready to take additional steps should conditions warrant," Bernanke said in a speech at the European Central Bank in Frankfurt. Central banks must remain vigilant because, despite some fleeting signs of improvement in credit-market conditions, market volatility and the latest reports on economic conditions make clear that challenges remain for the global economy, Bernanke said. "The continuing volatility of markets and recent indicators of economic performance confirm that challenges remain," Bernanke said. In his remarks, Bernanke praised the close ties that he has developed with ECB President Jean-Claude Trichet and other central bankers. "In times like these, we are especially aware of the importance of having close working relationships with our central bank colleagues around the world," Bernanke said. The banks have put in place swap lines so that they each have ready access to each other's currencies. In addition, last month, they engineered a rare coordinated cut in interest rates. Still, actions taken in monetary policy -- perhaps the most important tool available to central bankers -- "have not resolved the strains in financial markets, including interbank funding markets," Bernanke said. Financial markets remain under "severe strain," he said. "Central bankers and other policy makers around the world must continue to work together to address disruptions in credit markets and to promote a vibrant global economy," Bernanke concluded.

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