The Taoiseach has said the country is in an unprecedented situation.
Speaking on RTÉ’s ‘This Week’ programme, he said all governments are trying to contend with 'a fracture of the financial system' worldwide.
Mr Cowen said the Government will have to increase tax revenue and everyone will have to pay according to their ability.
He also said the Government is not yet considering a pay cut for the public sector but that all options will have to be considered.
Meanwhile, new loan disclosure rulings have come into effect today.
Banks will now have to give details of the maximum amount of loans outstanding at any time during the year to individual directors.
This would include loans to people linked to each director.
The regulator did not previously have requirements for public reporting of directors' loans, as they were dealt with under company law.
Mr Cowen last night announced that a new Banking Commission, bringing together the Central Bank and the Financial Regulator, will be set up.
The Taoiseach warned that living standards will fall, services will suffer and that restoring the economy will be painful.
In his first leader's address to the Fianna Fáil Ard Fheis, Mr Cowen also said taxes would have to rise, but that the well-off would pay most.
Mr Cowen said Ireland would rise again if people worked together for the common good.
The latest opinion poll shows support for Fianna Fáil at an historic low of 23%.
The Red C poll in today's Sunday Business Post shows the party down five points since a similar poll last month.
Fine Gael is down three to 30%. Labour is up 8 points to 22%. The Greens down two at 6%, Sinn Féin up two to 11% and Independents and others unchanged at 8%.