Carmen’s influence on the profession is also reflected by the fact that she has coined a number of terms that have since become part of economists’ vocabulary. Every student of international macroeconomics learns about ‘twin crises’ – situations in which banking and  Page 2/4  currency crises occur simultaneously. The term goes back to a paper written by Carmen and Graciela Kaminsky, which demonstrated that these two types of crises often go hand-in-hand and reinforce each other. Another well-known term coined in Carmen’s work is ‘debt intolerance’, which refers to the tendency of emerging market governments to default at relatively low levels of debt. Carmen’s research is distinguished by her extensive efforts in collecting and compiling historical datasets. This is best exemplified by her famous book ‘This Time is Different: Eight Centuries of Financial Folly’, co-authored with Ken Rogoff, who by the way gave the Karl Brunner Lecture in 2016. Based on a vast dataset covering several centuries, the book documents the way in which financial crises have repeated themselves over and over again in history, often following similar patterns. Even when the signs of an impending crisis are there for anyone to see, people usually find good reasons why ‘this time is different’. Such a failure to learn from history often turns out to be the breeding ground for the next crisis. With their book, Carmen and Ken accomplished the seemingly impossible task of writing an international bestseller consisting mostly of economic data and analysis.
To this end, under the regulations, the resolution plans for these institutions should ensure the continuity of their critical functions under any circumstances. Thus, in general, these plans envisage business reorganisation, restructuring or segregation measures if the institution reaches the point of non-viability and they provide for the availability of a sufficient minimum volume of own funds and eligible liabilities (the aforementioned MREL), that enable losses to be absorbed and the institution’s capital base to be shored up, if necessary. 5/10  Indeed, the degree of stringency ultimately adopted in respect of the MREL requirement may determine the relative size of the two groups of banks indicated, i.e. those that may be wound up and those that may be resolved. In particular, demanding MREL requirements that were to entail the need for susceptible banks subject to resolution to issue large volumes of eligible liabilities on the markets might not be assumable by certain types of banks. This might be the case for banks pursuing a traditional retail banking model, funded essentially by capital and through the raising of deposits, and with little tradition of participation in the capital markets. What is involved is a potentially numerous group of banks, not necessarily very small in size. Consider that, in the Single Supervisory Mechanism (SSM), 70% of significant institutions are not listed on the markets, almost 60% have never issued convertible instruments and almost one-quarter of them do not finance themselves with subordinated debt.