Central banks can also contribute to the function of money markets more broadly, by being willing to act early to address potential liquidity needs, and to support money market infrastructure more generally. I’ll end with a word on central banks’ “footprint.” Many of the developments raised in the paper and that will be discussed over the course of this conference have been a response to the needs of the day: having more reserves in the system is a reflection of the monetary policy stance required by economic developments; the leverage ratio has been developed as a part of the response to failure of the pre-crisis capital framework; and our intervention in risk-free benchmark rates is intended to avoid a co-ordination failure in which the most appropriate and robust benchmarks would not be adopted by the market. So while it is true to say that central banks’ footprint in money markets is larger now than in the days prior to the crisis, this has been out of necessity rather than design. As a tribe, central bankers retain a strong belief in financial markets’ ability to facilitate price discovery, allocate capital efficiently, and provide useful signals about the macro economy and financial stability. References Duffie, D and Krishnamurthy, A (2016), “Passthrough efficiency in the Fed’s New Monetary Policy Setting”, Preliminary version for presentation at the 2016 Jackson Hole Symposium. Fender, I and Lewrick, U (2015), “Calibrating the leverage ratio”, BIS Quarterly Review, December, pages 43–58.
Luis de Guindos: Interview in Expresso Interview with Mr Luis de Guindos, Vice-President of the European Central Bank, and Expresso, conducted by Mr João Silvestre on 15 April 2020. * * *  Is this the greatest crisis in living memory? According to the International Monetary Fund (IMF), this will be the worst downturn since the Great Depression. There is a great deal of uncertainty and, given this degree of uncertainty, we need to define and analyse several scenarios. The IMF’s baseline scenario is very similar to other public and private sector forecasts. It’s important to bear in mind that the impact on the economy, which will be huge, is concentrated in the second quarter of the year – as well as in March – and that the impact will be severe, but temporary. This temporary aspect is important. The calculations point to a contraction in the second quarter by as much as 20% compared with the previous quarter. And it will also have an impact on public finances and the financial markets. Despite the uncertainty you have mentioned, is a rapid recovery possible in 2021? The key factor is the duration of the lockdown – the longer it lasts, the greater the impact. We hope that the containment measures will start to be eased over the coming months, reducing the negative impact on the economy, and that we will see a return to positive growth rates in the second half of the year.