28 The original Bretton Woods system was established after WWII and consisted in a formal commitment of its participant countries to maintain foreign exchange rates, determined against a gold parity, at a specific level, with acceptable deviations not exceeding 1 percent. The system ceased to exist in 1971, after president Nixon had taken a decision that the US would no longer exchange dollars for gold according to the parity determined. The nature of the reactivated Bretton Woods, often called Bretton Woods 2, is well conveyed in the motto used by the authors of this concept: “(…) if I had an agreement with my tailor that whatever money I pay him returns to me on the very same day as a loan, I would have no objection at all to ordering more suits from him” (Jacques Rueff, 1965, after Dooley et al. (2003). 27  Taking into account the fact that China has already used USD 60 billion of its foreign exchange reserves for capital injections to two commercial banks, the People’s Bank of China has a level of reserves that exceeds USD 900 billion. 28  A series of articles on the topic was commenced with the work of M.Dooley, D.Folkerts-Landau and P.Garber „An Essay on the Revived Bretton Woods System“, NBER Working Paper 9971, September 2003.
Thomas Jordan: Mortgage financing and the risks of a credit crunch in Switzerland and abroad Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the Schweizer Ökonomentag, University of Zurich, 10 September 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The international financial crisis has raised the question of the risks of a credit crunch on domestic and foreign property markets. A credit crunch can occur if banks’ ability to lend is constrained, or if their lending practices become more risk averse. From a macroeconomic perspective, a credit crunch is relevant because it can reinforce an economic slowdown. The risks of a property market credit crunch differ from country to country. Mortgage markets in the US and UK are showing clear signs of a credit crunch. Both countries have typically seen a sharp slowdown in credit growth, falling house prices and weaker bank balance sheets. Mortgage lending in these countries over the past few years has increasingly been financed through securitisation. The current loss of investor confidence in securitisation has thus hampered banks’ ability to refinance mortgage contracts and, as a result, banks in both countries are finding it harder to grant new mortgage loans. At the same time, falling prices have dampened their risk appetite as regards lending. This decline in the supply of credit is now weighing on economic developments in these countries.