lael brainard : introductory remarks for the fed listens panel on the covid - 19 pandemic introductory remarks ( via webcast ) by ms lael brainard, member of the board of governors of the federal reserve system, at " a fed listens event : how is covid - 19 affecting your community? ", sponsored by the board of governors of the federal reserve system, washington dc, 21 may 2020. * * * this will be the 15th fed listens event the federal reserve has conducted over 16 months. we have listened to diverse voices from every type of community in every sector and every district of our country. this rich set of perspectives is helping bring alive for us the importance of the review of our monetary policy strategy, tools, and communication practices led by vice chair richard clarida. we have heard that maximum employment is not captured in a single national average, it brings vital benefits, and it takes a very long time to arrive in many neighborhoods. we have heard that inflation matters : households at different life stages and in different places are balancing the cost of living against their earnings, while businesses are balancing wages and other costs against their pricing power. we have heard that access to credit matters, and that it is important to use the full range of tools to support the economy. when we embarked on this listening journey, little did we know that our nation would experience the heartache and hardship associated with the covid - 19 pandemic — an emergency unprecedented in modern times. last year, we heard from small businesses that were expanding their workforces and investing in their communities. today, many of those same businesses are running low on cash reserves and struggling to make rent and payroll — especially those in consumer services, such as restaurants and retail. last year, national unemployment had fallen to its lowest point in over five decades. today, unemployment has surged to levels not seen since the great depression. last year, historically challenged groups were gaining a foothold in the workforce, and employers were investing in training and loosening job eligibility requirements. today, the fallout from the covid pandemic has cruelly hit groups with thinner financial cushions the hardest — workers in the lowest quarter of earnings, people of color, low and moderate income communities, and women disproportionately employed in services jobs. as we think about how the federal reserve ’ s tools and presence in communities around the country could best provide stability at this trying time and strong support for the recovery

more important as sources of credit for many countries. this greater importance raised new issues for debt restructuring, given the more atomistic and dispersed nature of bondholders as a group. the emergence of very large international support packages - - for mexico in 1995, several asian countries and brazil in 1997 and 1998, and turkey and argentina more recently - - may be seen in part as a response to the perceived difficulties of engaging private creditors, particularly bondholders, in the resolution of emerging - market debt problems. this point, however, should not be overstated. many private investors - - most notably those who invested in equities - - have taken substantial losses during recent crises. the provision of large financial - assistance packages has been criticized because of a focus on only two possible outcomes for emerging - market economies facing financial difficulties - - either default or no default, with the international official community viewed as often endeavoring to avoid default at all costs. developing procedures aimed at facilitating intermediate solutions - - namely, some form of debt restructuring with private - sector involvement - - might, in this view, help avoid disruptive, corner solution outcomes. moreover, large support programs have been criticized for exacerbating so - called moral hazard by encouraging overborrowing and overlending through leading investors to believe that the official community will bail them out should debt repayment problems arise. a key argument for private - sector involvement is that markets will price risk properly and allocate resources efficiently only if investors are forced to bear the costs of their bad decisions. the hope is that, if the broad principles for achieving private - sector involvement are known in advance, they might reduce investors'uncertainty about the rules of the game and help to ensure that workouts proceed smoothly and predictably. the principles could facilitate orderly resolution of financial crises and might also help prevent crises by reducing uncertainty as to how investors would be dealt with during times of crisis. in recent years, a tremendous amount of discussion has been devoted to considering means by which private investors could be involved during financial crises on an orderly, systematic, and predictable basis. yet these efforts still have a long way to go. some members of the official community find it difficult to accept the notion of sanctioning arrears or default. also, some have concerns that strict limitations on official imf support could constrain the official sector when such support was genuinely needed to avert international contagion. agreement on abstract principles of private - sector involvement remain elusive, but