I’ll use this to lead into a discussion of the issues facing policymakers as we go forward. This slide was put together for a briefing recently by Harvey Rosenblum. It charts employment by Federal Reserve district from the time job creation peaked in each district until today. A quick explanation to make this easier on the eye: The bottom, or horizontal  2  BIS central bankers’ speeches  axis, is the time in months since employment peaked in each district. For example, it has been roughly 54 months since employment peaked in the Atlanta district, which is depicted by the tan bottom line; it has been 36 months since employment peaked in the Dallas district, as shown in the shorter red line at the top. Observing the vertical axis, you can see that the only Fed district that is recovering to employment levels enjoyed at the peak is Dallas. In point of fact, the only other states that are back to or have punched through their previous peak employment levels are Alaska and North Dakota, which, combined, have a population of 1.4 million good citizens. The other 11 Fed districts are hovering at levels approximately 3 to 8 percent below peak employment, while the nation as a whole – the black line – is still 5 percent below the levels that prevailed in 2008. Of course, in Texas we have a long tradition of outperforming the nation – a tradition matched only by our long-standing reputation for modesty.
It draws on two stylised approaches to resolution: a so-called “single point of entry” approach, under which resolution of a whole group is executed, primarily by the home authority and mainly at the level of the parent or holding company; and, secondly, a “multiple point of entry” approach whereby co-ordinated actions are taken by a number authorities along national, regional or functional lines. There is, of course, a spectrum between those two poles. Identifying the resolution strategy that is most likely best suited to each specific firm is very important. The strategy must be relatively easy to understand – a strategy that cannot be explained concisely to top officials in central banks and regulators is not a strategy at all. But although authorities should try to identify a preferred strategy and should be as transparent as possible, I should caution that what turns out to be the best approach in the event of distress will depend on the circumstances. The suggestion of a “Presumptive Path”, being aired by some in the market, is somewhat unrealistic, at least in its strongest form. Public authorities with statutory obligations to maintain stability cannot bind themselves to detailed strategies that in the event might not work as well as an alternative. At the planning stage, whether a single- or a multiple-point-of-entry strategy looks more feasible will depend upon a group’s organisational and financial structure. It is likely that some groups will need to adapt themselves in order to remove impediments to resolution. Much of that will be case by case.