The 2012 annual Sir Leslie Melville Lecture delivered by Dr Alan Bollard, Governor of the Reserve Bank of New Zealand.The near-meltdown in the financial system in 2007-08 and ensuing global recession have left challenging legacies. Monetary and fiscal policy in major advanced economies have found themselves backed into difficult corners. Meanwhile, researchers and forecasters are fundamentally rethinking economic frameworks to tackle financial fragility, contagion and instability. Dr Bollard explores some of the analytical and policy conundrums emerging from the crisis experience to date.Dr Alan Bollard was appointed as Governor of the Reserve Bank of New Zealand in September 2002. His previous positions include: Secretary to the Treasury 1998-2002, Chairman of the New Zealand Commerce Commission 1994-1998 and Director of the New Zealand Institute of Economic Research 1987-1994.Dr Bollard has written a number of books on the New Zealand economy, the most recent one on the Global Financial Crisis. He has produced a computer simulation game called Oikonomos where one plays at being the Minister of Finance, and has helped rebuild the famous Phillips hydraulic economic simulation model "the Moniac".