Ricardo has developed, together with Robert Hall, a framework to analyse central banks’ solvency under “new-style central banking” and studied a model in which the interest rate on bank reserves is the main policy tool of the central bank.11 As you know, besides his research activities, Ricardo has also been an active participant in policy debates, notably concerning safe bonds for the euro area and economic developments in his native Portugal.12 Ricardo’s work is macroeconomics at its best: in contact with data, innovative and with lessons for policymakers.
We held a public hearing on June 14 to discuss industry practices, including those pertaining to pre-payment penalties, the use of escrow accounts for taxes and insurance, stated-income and low-documentation lending, and the evaluation of a borrower’s ability to repay. The discussion and ideas we heard were extremely useful, and we look forward to receiving additional public comments in coming weeks.