place directed by different agencies and in conjunction with the treasury. at the same time, fiscal policy was engaging with congress approving the $ 750 billion troubled asset relief program ( tarp ) program. policy had entered the “ whatever it takes ” phase in an effort to keep the great recession from becoming something much worse. 15 by the spring of 2009, the various guarantees and backstop liquidity facilities covering different sectors of the shadow banking system were in place. the last element required to deal with the panic of 2007 was to address the uncertainty over the viability of the large systemically important financial institutions. a horizontal review of the 19 largest financial firms was conducted to assess their capital needs under a “ worse - than - anticipated economic scenario ” – this was called the supervisory capital assessment program or scap ( you can tell that we are fond of acronyms ). there were two design features of the scap program that were essential for its ability to reduce the uncertainty in financial markets. first, the process was designed to be transparent with both the methodology published up front and the firm - by - firm results published at the conclusion. second, if a firm was deemed to need capital but was unable to raise it in the see brian sack. 2010. “ reflections on the talf and the federal reserve ’ s role as liquidity provider ”. remarks at the new york association for business economists, june 6. david wessel. 2009. in fed we trust. new york : crown business. market, treasury pledged to provide the capital. the scap program was successful in restoring a degree of confidence in financial markets and in enabling these financial firms to raise capital on their own. by the second half of 2009, the financial fever from the panic of 2007 had finally broken with the 3 - month libor / ois spread narrowing back to pre - crisis levels. 16 the economy began to grow again. having served their purpose, the fed ’ s special liquidity facilities have been wound down. the policy focus has shifted to regulatory reforms and how to prevent a future financial crisis. to be successful, these reforms must deal with the run dynamics in the shadow banking system, as well as devise ways to limit the leverage cycle that is an integral part of asset booms and busts that can trigger a panic. if the lessons from the panics of 1907 and 2007 are incorporated into the reforms, we may well avoid the panic of 2107. recently the spread has widened with the onset of concerns over

pablo hernandez de cos : remittance flows and their effects on latin american macroeconomic and financial stability during the covid - 19 crisis introductory remarks by mr pablo hernandez de cos, governor of the bank of spain and chair of the basel committee on banking supervision, to the virtual seminar on “ remittance flows and their effects on latin american macroeconomic and financial stability during the covid - 19 crisis ”, organized by the fondo latinoamericano de reservas ( flar ) and the bank of spain, webinar, 27 july 2021. * * * good afternoon, ladies and gentlemen. let me first thank flar ( the latin american reserve fund ) and its president, jose dario uribe, for the opportunity of jointly organising this webinar with the banco de espana. it will be the first of many and marks the start of close collaboration between both institutions, formalised in a memorandum of understanding in december 2020. the close economic and financial ties between latin america and spain are widely known. the interest of the banco de espana in the region has grown, as you know, owing to the internationalisation of spanish banks since the early 1990s, largely directed towards latin america. in this process, the region has taken on great significance for the spanish banking system. indeed, spanish banks ’ exposures to latin america account, on pre - pandemic data, for almost one - fifth of the system ’ s total exposures, and for almost 30 % of exposures outside spain. accordingly, the region ’ s economic performance has a most significant influence on spanish banks ’ balance sheets, and the risks arising from these exposures may potentially become systemic. at the banco de espana, then, several directorates general – including economics, statistics and research ; financial stability, regulation and resolution ; and banking supervision – devote many resources to monitoring all that occurs in the latin american region from the real and financial perspective. however, the banco de espana remains ambitious to strengthen its knowledge of and links to the region ’ s economic agents. our first strategic plan, for the 2020 - 2024 period, approved in january last year, actually set as one of its priorities that of increasing our contribution to this objective. as part of this aim, we are pursuing a series of medium and long - term - oriented actions in the sphere of cooperation with latin american central banks and institutions. we also seek to extend and enhance our analytical capacity in respect of the region ’ s economies and financial