The Taoiseach has announced that a new Central Banking Commission will be set up as part of a radical reform of the system.
Watch The Taoiseach's Ard Fheis speech
In his speech to the Fianna Fáil Ard Fheis, Mr Cowen acknowledged there was huge anger and disgust at how some bankers had behaved.
The damage would have to be fixed, he said, as a properly functioning banking system was vital for the economy.
He said the Commission would incorporate both the responsibilities of the Central Bank and the supervision and regulatory functions of the Financial Regulator.
The Taoiseach told delegates that the Commission will be led by someone with an international reputation and reiterated that bank chiefs would have their salaries capped.
He also promised an overhaul of banking regulation and a €100 million fund to support vulnerable companies.
Mr Cowen said recovery will be tough but as a small nation we can adapt radically.
He warned that taxes would rise and services would suffer in the short-term in order to come out of recession.
Mr Cowen repeated that everyone would have to pay more tax to plug the gap in the public finances but he said the well-off would pay a larger proportion.
The Taoiseach said the unemployed were more than just statistics and the loss also affected their families.
He added that a €100 million fund will be administered by Enterprise Ireland to support viable companies.
Mr Cowen also underlined the importance of business remaining competitive and said we must work harder and smarter.
Text of Brian Cowen's speech
Lenihan says tax increases likely
Minister for Finance Brian Lenihan has confirmed that tax increases will have to be introduced.
Mr Lenihan also told the Fianna Fáil Ard Fheis that if the Government had foreseen the extent of the international crisis, they would have done things differently.
He said that just as Ireland was the first country to enter recession, he hoped we will be the first to get out ot if.
He said he would receive a report of banking remuneration this week and definite caps would be placed on senior management salaries.
He added that banking salaries were way out of line with comparable industries.
Mr Lenihan said the President of the European Central Bank Jean Claude Trichet had said the Irish Government was taking the right steps to put country on the right road.
In his speech, Minister for Justice Dermot Ahern said people used to dining in fancy restaurants might end up eating porridge instead as they will face the full rigours of the law if they committed crimes and played fast and loose with the country's financial reputation.
Referring to ongoing investigations into financial irregularities he said some financial institutions may have been prey not just to those with shotguns and balaclavas.
He said no one is above the law, but that people cannot be brought to justice in hours or days as the opposition claim.
He said that due process is there to ensure people are brought to justice for their crimes.
Speaking about the wider economic situation, Mr Ahern said that much of what they do will be unpopular but that they have no choice about it because of the unprecedented nature of the economic whirlwind the whole world finds itself in.
If they fail, he said, thousands would be condemned to emigration and unemployment.
Earlier, Minister for Enterprise, Trade and Employment Mary Coughlan told the Ard Fheis that job creation was the bottom line for the economy.
She said the Government was working on fostering long-term, sustainable jobs to support a good quality of life.
She also said her department was working on a range of measures to deal with spiralling unemployment which would be finalised soon.
Ms Coughlan also said that she had sought commitment from the two principal business lending banks to support start up companies.
This morning, delegates debated a wide range of motions on the economy.
The Ard Fheis heard a call for the Minister for Community Rural and Gaeltacht Affairs Éamon Ó Cuív and the Minister for the Environment John Gormley to sort out difficulties with rural housing.
The opening session of the Ard Fheis heavily featured the Lisbon Treaty, and also heard from delegates critical of the interview process for selecting local election candidates.