With stock markets plunging once again Monday, the President’s Working Group on Financial Markets issued a statement indicating that it is working with regulators and market players around the world to restore confidence and stability in the market.

It noted that the passage of the Emergency Economic Stabilization Act of 2008 will empower new authorities that will be employed in conjunction with existing authorities to restore market confidence by strengthening the balance sheets of financial intermediaries and improving overall market functioning.

“The diversity of institutions and markets under stress, and the magnitude and complexity of the adjustment underway, requires that the tools available to policymakers, regulators and supervisors be used in forceful and coordinated ways across regulatory and supervisory agencies in the United States and throughout the world,” it said.

In addition to the ESSA, the PWG noted that the FDIC has broad powers to protect depositors and mitigate instability in the U.S. banking system. In addition to the coverage that it provides to insured deposits, the FDIC has the ability to use its insurance fund and its substantial lines of credit with the Treasury to address the risk to the financial system posed by the possible failure of a bank.

“When systemic risk determinations are necessary and appropriate in the future, the FDIC will use its authority and its resources, on an open or closed-bank basis, to protect depositors, guarantee liabilities, facilitate orderly wind downs, mergers, or adopt other stabilizing measures,” it said.

Also, the Federal Reserve, “is committed to using all of the tools at its disposal to provide the increased liquidity that is now required for the effective functioning of financial markets.” Under the ESSA, it now has the authority to pay interest on reserves allowing it to expand its balance sheet to support financial stability. “The Federal Reserve and the Treasury Department are consulting with market participants on ways to provide additional support for term unsecured funding markets,” it said.

Regulators are also closely monitoring clearing and settlement systems to ensure their proper functioning, it said.