With gold reaching $1,000 an ounce and posting new highs versus all currencies, are there any hard currencies left? Over the past 100 years, we have moved further and further away from the gold standard. We see no indication for that trend to reverse; if anything, it may accelerate. As…

As you are aware, the U.S. economy is undergoing a severe contraction. Employment has fallen steeply since last autumn, and the unemployment rate has moved up to 7.6 percent. The deteriorating job market, considerable losses of equity and housing wealth, and tight lending conditions have weighed down consumer sentiment and…

Euro area banks’ losses on loans in Central and Eastern Europe (CEE) will be substantial due to an unfortunate mix of collapsing property prices, economic downturn and exchange rate depreciation. Austria is by far the most exposed country, but the government can afford to absorb the losses. Belgium, which is…

The current economic and financial crisis is often compared to the Great Depression, which lasted more than three and a half years between August 1929 and March 1933. During this period US unemployment rose from 3% to 25% and real GDP declined by 30%. In this paper we look more…

Shortly after the Committee last met, the global financial system took a serious turn for the worse. On 15 September 2008, the American firm Lehman Brothers filed for bankruptcy. It was the biggest actual failure of a major American financial institution for many years. While it had been widely known…

FOMC participants viewed the outlook for economic activity and inflation as having weakened significantly since last October, when their last projections were made. As indicated in Table 1 and depicted in Figure 1, participants projected that real GDP would contract this year, that the unemployment rate would increase substantially, and…

he Federal Open Market Committee authorizes and directs the Federal Reserve Bank of New York, for System Open Market Account, to the extent necessary to carry out the Committee’s foreign currency directive and express authorizations by the Committee pursuant thereto, and in conformity with such procedural instructions as the Committee…

We live in extraordinarily challenging times for the global economy and for economic policymakers, not least for central banks such as the Federal Reserve. As you know, the recent economic statistics have been dismal, with many economies, including ours, having fallen into recession. And behind those statistics, we must never…

Conditions in financial markets remained difficult. There had been a spate of poor bank earnings results internationally, which appeared to have increased the perception among market participants that the global banking system was in worse shape than previously thought. And the macroeconomic outlook had deteriorated further. Against that backdrop, the…

The global economy has suffered a sharp and synchronised downturn. Business and household sentiment in many countries has deteriorated markedly, and the global banking and financial system has remained fragile. In the United Kingdom, an adjustment process is under way, as private saving rises and banks restructure their balance sheets….