Central banks will have to withdraw excess liquidity pumped into financial systems to prevent an "inflationary bubble," Bank of Israel Governor Stanley Fischer said Wednesday at the International Organization of Securities Commissions conference in Tel Aviv. "Whether or not these concerns about inflation become reality depends primarily on central banks and their willingness to raise interest rates and withdraw liquidity from the system as the recovery gets under way and inflationary risks increase," he said. "In some cases this will have to be done sooner, in others later." "This conference takes place in the wake of the most challenging crisis, many would say," Fischer said. "But I would say we have been experiencing the most frightening crisis since the Great Depression. "Due mainly to unprecedented actions by the US Federal Reserve, in particular, and central banks, in general, the financial situation was first stabilized and has now begun to return to a more normal functioning. Now we have reached the point when central banks will need to start withdrawing the liquidity pumped into the financial system in the wake of the Lehman Brothers collapse to prevent what everyone worries about: a rise in inflation and another bubble." Fischer said he was confident that his colleagues will demonstrate a willingness to act and raise interest rates as inflation risks increase. "The importance is to act in time and not prematurely," he said. Fischer said investor confidence was returning. "That is being evidenced by bond spreads narrowing back to levels from before Lehman's collapse and even prior to the fall of Bear Stearns earlier in 2008," he said. Also speaking at the conference, Jane Diplock, chairwoman of the IOSCO executive committee and the New Zealand Securities Commission, said the conference was the first opportunity to come together as a global community since the global financial crisis began. "While recovery now seems inevitable, challenges remain," she said. "The ongoing crisis highlights the importance of stability concerns and reducing systematic risk while continuing to protect investors and promote the fairness, efficiency and transparency of markets." "Much still needs to be done at the global level in regard to unregulated financial products and under-regulated market segments," Diplock said. "Some have suggested the cure for the world's ills is a global super-regulator; I don't agree. Each jurisdiction's regulatory framework is closely pinned to its own economy, and I believe it's unrealistic to expect any national authority to cede its jurisdiction to such a regulator." Diplock suggested that a similar model to the Internet - a vast complex web of often fiercely opposed interests that link and cooperate within an overarching structure - could be implemented in form of a virtual global super-regulator. Bloomberg contributed to this report.