South Africa Reserve Bank’s 100th anniversary

What a time to be a student of money and banking. Along with discussions on future of money, there are so many anniversaries taking us back to history.

On 30 June 1921, South Africa Reserve Bank was established. The year 2021 marks its 100th anniversary.  SARB was the first major central bank outside of Europe and US.

Today, 30 June 2021, the South African Reserve Bank (SARB) marks a significant milestone as it celebrates its centenary birthday. This makes South Africa’s central bank the oldest central bank in Africa. To mark its centenary, the SARB will issue a commemorative circulation R5 coin.

Over the past 100 years, the SARB has navigated through the tail end of the Spanish flu as well as the Great Depression, the Second World War, the abandonment of the gold standard, the introduction of the rand, the oil crisis, the end of the Cold War, the end of apartheid, and several financial and economic crises.

The SARB was established in 1921 as the central bank of South Africa in terms of a special Act of Parliament. The SARB was mainly set up because of the need to issue uniform banknotes and to prevent the over-issuance of banknotes. Before the SARB was established, banknotes from several different commercial banks were in circulation in South Africa. With the formation of the SARB, it obtained the sole right to issue banknotes in South Africa.

When the SARB was established, the government gave banks shares in the SARB to compensate them for taking away their right to print money. Furthermore, government did not have the money to capitalise the central bank and so it relied on private finance for its initial capital. The financial and policy influence of shareholders on the SARB diminished gradually over the years. Today, shareholders play no role in policy-setting or regulation; the Governor, deputy governors and the majority of the members of the Board of Directors (Board) of the SARB are appointed by government and dividends are capped at just R200 000 a year in total. While there are still foreigners who hold shares, their voting rights are severely limited.

On the occasion, Lesetja Kganyago, Governor of the South African Reserve Bank gave a speech discussing the history, present and future of the central bank.

On this day, 100 years ago, at Church Street east, the first Governor of the South African Reserve Bank (SARB), Mr William Henry Clegg, and 14 other men opened the doors of the SARB to the public. The world had just emerged from World War I, leading to unusual financial and monetary conditions. In establishing the SARB, the primary objective was simple: to restore and maintain order in the issue and circulation of domestic currency, and restore the gold standard to the pre-World War I rate of exchange. From the archives, the first Board meeting minutes, dated 29 July 1921 at 10:00, disclose that the first order of business entailed “the purchase of property in Pretoria for £7 000 and the first orders of banknotes”. The former was finalised in the late 1920s, while the first batch of banknotes ordered from England was issued to the public on 19 April 1922.

Hope SARB releases more material like a monograph on its history.

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30 years of Slovenia Central Bank: Intriguing history of Solvenian money

Slovenia’s Central bank celebrated its 30th anniversary on 25 June 1991.

The central bank in this press release commemorates the anniversary and shares interesting history:

The establishment of the Slovenian central bank as an independent monetary institution was adopted together with other constitutive documents in the historic parliamentary session of 25 June 1991. For this reason, together with Slovenia itself, this year sees Banka Slovenije celebrate its 30th anniversary. In this period of time, we have materially contributed to the development of the country and have been a part of numerous significant milestones for Slovenia.

“The Banka Slovenije Act serves to put in place the foundations of the monetary system and central bank operations in the republic, whereby the decision to adopt our own monetary system and to establish an independent central bank is being fulfilled.” With these words, in the historic session of 25 June 1991, then Prime Minister Lojze Peterle explained the significance of establishing the Slovenian central bank. By establishing its own central bank, Slovenia took hold of the key levers for conducting monetary policy: providing Slovenia’s own currency, stable price levels and ensuring stability in the banking system.

The economic situation at that time was marked by some special circumstances. There was high inflation and cash and foreign currency restrictions, and the separation from the National Bank of Yugoslavia was in the process of being settled. In such circumstances, preparations for the issuing of temporary cash in the form of payment notes had begun well in advance. Paper left over from the stock used for admission tickets to the Sarajevo Olympics was used to print the notes. That is why the payment notes had the water mark of a snowflake. Slovenians could exchange Yugoslav dinars for the payment notes starting on 9 October, which was the day after the agreed three-month moratorium on implementing the adopted independence laws expired. The day before that, Banka Slovenije had ensured the supply of the necessary quantities of banknotes to financial institutions.

The central bank also released timeline of its interesting history and of its money.

 

How Italy produced a large number of influential economists in last 40 years?

Enrico Nano, Ugo Panizza, Martina Viarengo in this voxeu research:

Over the last 40 years, Italy has produced a large number of influential economists. This is somewhat surprising because economics is more likely to require technical training than other social sciences and, until the 1980s, Italy did not have any formal doctoral programme. This column examines how a large scholarship program contributed to the formation of a generation of Italian economists with a focus on gender and socioeconomic status, and on their interaction with social mobility.  

Coal-Fired Power Plant Retirements in the U.S.

Rebecca J. Davis, J. Scott Holladay & Charles Sims in this NBER paper:

We summarize the history of U.S. coal-fired plant retirements over the last decade, describe planned future retirements, and forecast the remaining operating life for every operating coal-fired generator. We summarize the technology and location trends that are correlated with the observed retirements. We then describe a theoretical model of the retirement decision coal generator owners face. We use retirements from the last decade to quantify the relationships in the model for retired generators.

Our model predicts that three-quarters of coal generation capacity will retire in the next twenty years, with most of that retirement concentrated in the next five years. Policy has limited ability to affect retirement times. A $20 per MWh electricity subsidy extends the average life of a generator by six years. A $51 per ton carbon tax brings forward retirement dates by about two years. In all scenarios, a handful of electricity generators remain on the grid beyond our forecast horizon.

How lasting are the economic consequences of pandemics? 220 years of Swedish experiences

Stefan Laséen of Riksbank’s Monetary Policy Department in this paper analyses the impact of pandemics on Sweden economy in last 220 years:

In this article I use the Riksbank’s historical monetary statistics to analyse what effects pandemics have had on demographic and economic variables in Sweden since the start of the 19th century. The results show that pandemics have had negative effects on birth rates, death rates and family formation. Pandemics have also adversely affected the Swedish economy in the short term. The longer term effects are less clear. The effects on foreign trade and investment have, on the other hand, tended to be more long lasting. Going forward, this could imply that it will be important to be aware of potential protectionist tendencies, such as export restrictions and tariffs.

The COVID-19 crisis is in many respects unique, and therefore it is difficult to draw conclusions regarding the current situation on the basis of earlier pandemics. Furthermore, society has developed quite dramatically over the past 220 years with regard to knowledge, statistics, amount and spread of information, supply of media, technology and medical care. But even if one can discuss what conclusions can be drawn on the basis of earlier pandemics, the historical perspective is interesting in itself. Thanks to this, one can identify structures and mechanisms that can help today’s decision-makers and authorities to better plan for and manage future threats.

Birth Centenary of PV Narasimha Rao | A look-back at his political and economic legacy

Today is birth centenary of India’ former PM PV Narasimha Rao.

My new article in Moneycontrol reflecting on his centenary.

 

Examining the Causes of Historical Failures of Central Counterparties

Sean Dowling and Sebastien Printant in this RBA Bulletin Article:

Although historically rare, the failure of a central counterparty (CCP) could severely disrupt and destabilise the financial system. This has driven a global push to implement resolution regimes so that authorities can support the continuity of critical functions of a distressed CCP. This article examines 3 CCP failures to identify common causes of failure that could help authorities prevent or prepare for a resolution. It finds that while there are some common causes of failure in the episodes considered, they have largely been addressed by improvements in CCP financial risk management in recent years.

The 3 CCP that failed were:

• Caisse de Liquidation des Affaires en Marchandises (1974)
• Kuala Lumpur Commodities Clearing House (1984)
• Hong Kong Futures Exchange (1987)

The three common causes for failure are:

This article identified 3 factors that were highlighted by the failures of the 3 CCPs examined. First, the CCP had a particular make-up of participants and clients which left them vulnerable to the consequences of major price movements. Second, perverse incentives for the CCPs led them to behave in ways that departed from appropriate financial risk management. Third, the CCPs had inadequate regulatory supervision and oversight. These factors, combined with a rapid unwinding of a large price increase, resulted in the CCPs’ failure.

These factors have, to a large extent, been mitigated by modern CCP risk management frameworks and stronger supervision, including through the implementation of the PFMI. However, CCPs are often systemically important and their failures could be sudden. It is therefore important for CCP supervisors and resolution authorities to remain vigilant to these factors, as well as emerging factors, which could cause a CCP failure. It will continue to be important that CCP supervisors and resolution authorities explore possible factors that could lead to a CCP failure, how to mitigate these factors, and how these factors might influence a possible CCP resolution.

30 years of India’s reforms: A podcast with key actors

Puja Mehra, author of Lost Decade has put up an interesting podcast on India’s reforms story.

It’s been 30 years since India opened up its economy, freeing it of the licence permit raj, improving access to capital, and introducing a New Industrial Policy. But what went on behind the scenes, and how have successive governments taken these reforms forward? In a series of seven conversations with economists, policymakers, thinkers and doers, Puja Mehra unpacks the story behind India’s reforms and finds out what’s likely to happen in the near future. This is a Mint production, brought to you by HT Smartcast.

The podcast features both, earlier and current architect of India’s reforms. Should be an interesting hear.

 

Fiscal regimes and the exchange rate

Enrique Alberola-Ila, Carlos Cantú, Paolo Cavallino and Nikola Mirkov in this BIS paper:

In this paper, we argue that the effect of monetary and fiscal policies on the exchange rate depends on the fiscal regime. A contractionary monetary (expansionary fiscal) shock can lead to a depreciation, rather than an appreciation, of the domestic currency if debt is not backed by future fiscal surpluses.

We look at daily movements of the Brazilian real around policy announcements and find strong support for the existence of two regimes with opposite signs. The unconventional response of the exchange rate occurs when fiscal fundamentals are deteriorating and markets’ concern about debt sustainability is rising.

To rationalize these findings, we propose a model of sovereign default in which foreign investors are subject to higher haircuts and fiscal policy shifts between Ricardian and non-Ricardian regimes. In the latter, sovereign default risk drives the currency risk premium and affects how the exchange rate reacts to policy shocks.

Regulating BigTech in financial services

Nice speech by Tobias Adrian of IMF on regulating BigTech in finance.

First the business model of BigTech is different from FinTechs:

There is no doubt technology is having a profound impact on the financial services industry globally. When we think of BigTech, we think of large technology conglomerates with extensive customer networks with core businesses in social media, telecommunications, internet search and e-commerce. They are present in all continents and in most – if not all – of our member jurisdictions.

The business model of BigTechs leverages three factors: the data they already have on consumers, aiding BigTechs to understand customer needs better; the advanced analytics they use to deepen this understanding further; and the reliance on strong networks effects, from leveraging their large consumer base. Their expansion into financial services can happen very quickly, as network effects drive interaction, user activity and the generation of ever greater amounts of data.

It is interesting to see that BigTech expansion into financial services happens in a different direction than what we would normally see in fintech start-ups. The new technologies that allowed fintech start-ups to unbundle financial services, offering partial financial services or aggregation and customer interface services, are used by BigTech to “reverse” the unbundling. Based on their large global user base of non-financial products, they benefit from cross-subsidization and economies of scale and scope. That makes them well positioned to capture a significant market share of financial services once they start providing them.

There are some potential benefits in this “rebundling”. BigTechs can use their knowledge of consumer preferences obtained through their other business areas, such as consumer spending habits and credit worthiness, to offer financial services to customers who may be underserved by traditional lenders. The economic and social benefits of financial deepening can be compelling.

Why we need to regulate BigTechs?

So, why should financial regulators be concerned with BigTech?

The provision of cloud services is a good example of how BigTech non-financial services could have broader implications. The cloud is the virtual delivery of computing services that powers the operations of diverse entities across all financial services. These range from the largest bank to investment managers and smallest start-ups.

The range is wide, yet there is a strong dependency on only a few critical providers. The Bank of England, in a 2020 survey, estimated that more than 70 percent of banks and 80 percent of insurers rely on just two cloud providers for IaaS (Infrastructure as a service). [2] Globally, 52 percent of cloud services are provided by just two BigTech entities, while more than two-thirds of services are provided by four BigTechs. [3]

This concentration highlights the reliance of the financial sector on the services provided by BigTech. Ultimately, failure of even one of these firms, or failure of a service could create a significant event in financial services, with a negative impact on markets, consumers, and financial stability. The importance of these services means that in some respects, BigTechs may be already ‘too-critical-to-fail’ in some.

Fintech firms in general are not yet systemically significant, because their market share of financial services in most jurisdictions is not yet material. 

In regulation, there are two broad approaches – entity based and activity based:

The BIS and FSI [6] have recently re-ignited the discussion on activity vs entity-based regulations and their adequacy to deal with BigTechs. I would like to explore these ideas a little further.

Consider the entity-based approach — in which regulations are applied to licensed entities, or to groups that engage in regulated activities. Requirements are imposed at the entity level and may include governance, prudential and conduct requirements. The entity-based approach can be built on principle-based regulations that allow more flexibility, as it can rely on expectations of governance and risk management of the entities and groups. Most important: There is a continuous engagement between supervised firms and supervisors, allow for the monitoring of the buildup of risks and the evolution of business models. Implementation is supported by supervisory activities (such as off-site monitoring and on-site inspections). Supervisors usually have a range of early steps that can be taken to modify firms’ behavior that could lead to excessive risk-taking and instability.

By comparison, consider the activity-based approach — in which regulations are applied to any entity (or individual) that engages in certain regulated activities. Those regulations are typically used for market conduct purposes. They are generally prescriptive, and compliance is ensured by fines and other enforcement actions. Most BigTech firms are already subject to such activity-based regulations in many countries, such as AML/CFT and consumer protection rules.

In some ways, the activity-based approach may encourage competition by requiring that only relevant regulatory permissions are needed to carry out certain activities. In theory, this “levels the playing field” by applying the same rules to the same activities, whoever is doing them. However, there are some important caveats. The approach must define activities very precisely, which is likely to create regulatory arbitrage opportunities, as it may not be able to capture rapidly changing and hard to define fintech activities. There is less room for supervisors to take actions before proceeding to enforcement. Because of this heavy reliance on enforcement, the activity-based approach is generally not suitable for early supervisory action to modify risky behavior. It is also not very effective for cross-border activities, unless global regulators adopt consistent regulations and unless international agreements allow for cross-country enforcement actions.

Therefore, where firms have a potentially systemic approach and have a business model that involves various inter-related risks, a more hybrid type of regulation makes sense. Since our Global Financial Stability Report of 2014, [7] the IMF has advocated for a mixed approach to address systemic risks posed by shadow banking. There are some similarities in the regulatory challenges between those from shadow banking and BigTech. For example, both have grown outside the regulatory perimeters to have potential systemic implications. While each individual entity and service may not pose systemic issues, the combination of the entities and services, provided as bank-like financial services, also creates systemic risks. Some entities and functions of both shadow banking and the BigTech ecosystem can easily relocate their headquarters and main activities to other jurisdictions where regulations are less robust.

Hmm..

The last thing this century needs is a cold war between US and China

Joschka Fischer, Germany’s foreign minister and vice chancellor from 1998 to 2005, in this Proj Syndicate piece:

This month’s G7 summit seemed to confirm what has long been apparent: The United States and China are entering into a cold war similar to the one between the US and the Soviet Union in the second half of the twentieth century.

The West no longer views China just as a competitor and rival but as a civilizational alternative. Once again, the conflict seems to be about mutually exclusive “systems.” Amid an escalating clash of values and competing claims to global power and leadership, a military confrontation – or at least a new arms race – seems to have become a distinct possibility.

But on closer examination, the Cold War comparison is misleading. The systemic rivalry between the US and the Soviet Union was preceded by one of the most brutal and catastrophic “hot” wars in history, and reflected the frontlines of that conflict.

….

The situation between the West and China today is totally different. Though the Communist Party of China calls the country “socialist” to justify its political monopoly, no one takes that label seriously. China does not define its difference from the West according to its position on private property; rather, it simply does and says whatever is necessary to maintain one-party rule. Since Deng Xiaoping’s reforms in the late 1970s, China has established a hybrid model that accommodates both markets and central planning, and both state and private ownership. The CPC alone stands at the top of this “Market-Leninist” model.

So why have a cold war at all?

Patchy data is a good start – from Kuznets and Clark to supervisors and climate

Frank Elderson of ECB in this speech reflects on how unprepared European banks are towards climate change.  The data is still patchy but is work in progress. He points how this is similar to starting the concept of national accounts and then gradually building it:

Supervising and managing climate risks represents a long journey into a new and complex topic for all of us. But progress is possible, as a few banks have already shown. Our efforts to raise the bar for climate risk management and disclosures are motivating some banks to explore climate and environmental risks further and manage them better. And it is important that we share the knowledge we gain and the lessons we learn along this journey.

When thinking of lessons learned, one looks to the past.

So let’s go back almost a century to the 1930s, a time when governments were struggling to pull their economies out of the abyss of the Great Depression.

After experimenting with new tools, it was the development of national accounts by economists like Clark in the United Kingdom and Kuznets in the United States that gave policymakers a first real grip on of how the economy was doing. It was a faulty measure – and remains so to this day – but it was the best possible solution at the time. No, national accounts were not harmonised. And yes, the data were patchy and incomplete at first. But as imperfect a measure as it was, it enabled progress and was a fundamental step towards lifting economies out of the Great Depression.

Fast forward 90 years – and you will find us here, today, facing an even greater challenge than the Great Depression: climate change. We have got better at collecting information on the consequences of climate change. As patchy as those data may be for now, it will enable progress in climate issues too. And in any case, banks do already have access to enough information to start making real progress.

Finance, Growth, and Inequality: A Literature Review

Ross Levine in this IMF paper surveys literature on impact of financial development on growth and inequality:

Finance and growth emerged as a distinct field of economics during the last three decades as economists integrated the fields of finance and economic growth and then explored the ramifications of the functioning of financial systems on economic growth, income distribution, and poverty. In this paper, I review theoretical and empirical research on the connections between the operation of the financial system and economic growth and inequality.

While subject to ample qualifications, the preponderance of evidence suggests that (1) financial development—both the development of banks and stock markets—spurs economic growth and (2) better functioning financial systems foster growth primarily by improving resource allocation and technological change, not by increasing saving rates. Some research also suggests that financial development expands economic opportunities and tightens income distribution, primarily by boosting the incomes of the poor.

This work implies that financial development fosters growth by expanding opportunities. Finally, and more tentatively, financial innovation—improvements in the ability of financial systems to ameliorate information and transaction costs—may be necessary for sustaining growth.

When central bank employees do equity transactions around monetary policy dates: Case of Sweden

Interesting press release from Sweden Central Bank:

In connection with a routine check of employees’ asset transactions, it has been noted that a few employees at the Riksbank have made transactions that are not in line with the Riksbank’s ethical regulations. However, it is a question of recurring savings and the employees themselves have reported the transactions on a regular basis in accordance with existing internal guidelines. The current events have concerned equity transactions shortly before monetary policy decisions and equity transactions in companies from which the Riksbank purchases corporate bonds for monetary policy purposes. This is inappropriate and therefore a number of measures have been taken, such as discussions with the employees concerned, clarification of internal information for everyone and also particular focus on educational initiatives. A revision of the regulations to improve clarity has also been initiated and will be completed before the end of 2021.

What are policies of other central banks regarding such transactions?

Voting right rotation, behavior of committee members and financial market reactions: evidence from the U.S. Federal Open Market Committee

Michael Ehrmann, Robin Tietz and Bauke Visser in this ECB paper analyse voting pattern in Federal Reserve:

Whether Federal Reserve Bank presidents have the right to vote on the U.S. monetary policy committee depends on a mechanical, yearly rotation scheme. Rotation is without exclusion: also nonvoting presidents attend and participate in the meetings of the committee. Does voting status change behavior? We find that the data go against the hypothesis that without the voting right, presidents use their public speeches and their meeting interventions to compensate for the loss of formal influence; rather, they support the hypothesis that the voting right makes presidents more involved. We also find that speeches move financial markets less in years that presidents vote. We argue that these discounts are consistent with their communication behavior.

Macro News and Micro News: complements or substitutes?

David Hirshleifer & Jinfei Sheng in this paper analyse the impact of micro and macro news on financial markets:

We study how the arrival of macro-news affects the stock market’s ability to incorporate the information in firm-level earnings announcements. Existing theories suggest that macro and firm-level earnings news are attention substitutes; macro-news announcements crowd out firm-level attention, causing less efficient processing of firm-level earnings announcements.

We find the opposite: the sensitivity of announcement returns to earnings news is 17% stronger, and post-earnings announcement drift 71% weaker, on macro-news days. This suggests a complementary relationship between macro and micro news that is consistent with either investor attention or information transmission channels.

The Opportunities and Dangers of Decentralizing Finance

Wharton legal studies and business ethics professor Kevin Werbach and David Gogel in this K@W article (and podcast):

DeFi is a developing area at the intersection of blockchain, digital assets, and financial services. DeFi protocols seek to disintermediate finance through both familiar and new service arrangements. They use stable-value cryptocurrencies known as stablecoins as assets, blockchain ledgers for settlement, and software-based smart contracts to execute transactions automatically.

The market experienced explosive growth beginning in 2020. According to tracking service DeFi Pulse, the value of digital assets locked into DeFi services grew from less than $1 billion in 2019 to over $15 billion at the end of 2020, and over $80 billion in May 2021. Novel business models such as yield farming — in which holders of cryptocurrencies earn rewards for providing capital to various services — and aggregation to optimize trading across exchanges in real-time are springing up rapidly. Innovations such as flash loans, which are either repaid or automatically unwound during the course of a transaction, open up both new forms of liquidity and unfamiliar risks.

Despite its scale and potential significance, DeFi is still early in its maturation. Now is the time to evaluate its benefits and dangers. As with everything in the cryptocurrency world, hype around DeFi is sometimes out of control. Extraordinary — and unsustainable — short-term returns warped investor expectations and attracted bad actors as well as innovative builders. Most DeFi activity is still speculative and conducted by relatively sophisticated cryptocurrency holders. As mainstream usage grows, risks and regulatory considerations will loom increasingly large.

Central banks as golden goose

In its monthly Bulletin, RBI econs have been writing on the State of Economy which has generated fair bit of discussion.

In the Jun-2021 edition, the researchers react to the recent RBI transfer of surplus to the government.

An aspect of the Annual Report that has raised considerable heat and dust in the media is the surplus transferred to the government. Mainly stemming from saving on balance sheet provisions and employees’ superannuation and other funds, the surplus constitutes just 0.44 per cent of GDP (which is taken as a measure of seigniorage).

“In flow terms, we can think of the central bank as the government’s golden goose. With an unimpaired balance sheet:

• The free-range goose conducting conservative monetary policy with a fair degree of independence produces golden eggs in the form of seigniorage worth 0.5 to 1 per cent of GDP;
• The battery farm goose, bred specially for intensive egg-laying, can produce golden eggs n the form of an inflation tax yielding 5 to 10 per cent of GDP;
• The force-fed goose can produce revenue of up to 25 per cent of GDP for a limited period before the inevitable demise of the goose and collapse of the economy. All three forms of central bank geese have been sighted in recent years.”

From the point of the surplus transfer alone, therefore, the Reserve Bank can be characterised as ‘free-ranging’ and conducting independent monetary policy, i.e., independent of fiscal dominance (Table 2).  

 

Specialization in Banking

Kristian S. Blickle, Cecilia Parlatore, and Anthony Saunders in this NY Fed paper:

Using highly detailed data on the loan portfolios of large U.S. banks, we document that these banks “specialize” by concentrating their lending disproportionately into one industry. This specialization improves a bank’s industry-specific knowledge and allows it to offer generous loan terms to borrowers, especially to firms with access to alternate sources of funding and during periods of greater nonbank lending. Superior industry-specific knowledge is further reflected in better loan and, ultimately, bank performance. Banks concentrate more on their primary industry in times of instability and relatively lower Tier 1 capital. Finally, specialization counteracts a well-documented trend in reduced lending by large banks to opaque small and medium-sized enterprises.

 

Capitalism after COVID: conversations with 21 economists

Luis Garicano in this voxeu piece points to this new edited book by him – Capitalism after COVID: Conversations with 21 Economists. The book emerged after discussions with leading economists:

While developed countries experienced an unprecedented economic shock between March 2020 and the spring of 2021, none of them suffered a financial crisis, nor did their citizens have to endure widespread poverty or their firms have to go through waves of bankruptcies. The bulk of the shock was absorbed by the public sector budget. 

That the world could produce such a massive, coherent, and rapid economic response to the pandemic had a lot to do with the consensus that quickly emerged among economists on how best to respond to the unprecedented shock. Within days of the declaration of a pandemic by the World Health Organization on 11 March 2020, economists formulated the empirical and theoretical case for a set of unprecedented measures in a series of influential articles and books (e.g. Baldwin and Weder di Mauro 2020a, 2020b), as well as in dozens of discussions and presentations in a myriad of online webinars. Unlike during the Great Financial Crisis, when there was an often-acrimonious debate between economists arguing for austerity and those arguing for stimulus, the priorities were clear: 

1. 1. Central banks should be concerned with maintaining financial stability and providing limitless liquidity to debt markets. 
   2. Governments should prioritise the maintenance of household incomes through generous support for workers’ incomes, albeit with different approaches in the US and Europe: significant expansions of unemployment insurance in the US and the general deployment of ‘Kurzarbeit’ in Europe.  
   3. Governments should provide ample liquidity facilities to firms, making it possible for them to emerge as undamaged as possible by the lockdowns. 
   4. Finally, large, debt-financed public investments would be needed to support the recovery. 

That intellectual effort succeeded, and governments took all these steps rapidly. A new CEPR book moves from the emergency to the medium-term response to the crisis. During the first 12 months of the pandemic, I interviewed a wide range of economists to reflect on the challenges the world would face after the crisis. Originally published on Spotify, Apple Podcasts, and YouTube, I have now transcribed them and have worked with CEPR to publish them as an eBook (Garicano 2021).