domestic flexibility to adjust wages and prices to correct lack of competitiveness. we therefore could not maintain the parity for long. it also led to distortion in risk perception that led to excessive foreign exchange risk mismatch, over investment in the non - traded sector and damaging speculation, especially in real estate. when we had to change to the flexible exchange regime, the exchange rate depreciated to a low point of less than 50 % of its pre - crisis value before backing up to above 60. the exchange losses that occurred was, among other things, one of the major factors causing the level of non - performing loans to go up to the peak of 45 %. this was almost one out of every two dollars lent out. what stress test can really prepare us for such an event? the second is to have the right infrastructure for the domestic financial markets. this topic includes many things like ( a ) having the proper market rules, ( b ) having the legal framework that facilitates the enforcement of creditors ’ rights, ( c ) having the laws and procedures to deal with bankruptcy, ( d ) having proper accounting and auditing standards as well as a reliable system of credit information on individual borrowers. i can still recall that during the 1997 crisis, the inter bank market in thailand ceased up for fear of counter party failure. but the problem also extended to the system of commercial trade credit between ordinary companies, the sellers and buyers of goods. today, five years after the event, the system of trade credit still has not regained its full recovery. this problem can be mitigated with the function of credit bureau that reports regularly on payment behavior of commercial firms. third is to ensure that there exists proper supervision of financial institutions. the country has to ensure that the agency entrusted with this task has sufficient power to act. i can still remember that in thailand long ago, when government successions often did not come from elections but through military actions, it was very common for commercial banks to have army generals sitting on their boards. banking supervision under such an environment was a challenge. but the biggest challenge is what to do when banks suffer such losses that they are unable to continue. this happened when thailand went into the crisis in 1997. we closed down two - thirds of our finance companies. as for the commercial banks, we had 15 local banks then. six banks had to be taken over by the authority. the private shareholders were forced to take full losses, and new capital provided by the authority. management

christine m cumming : macro overview of the united states remarks by ms christine m cumming, first vice president of the federal reserve bank of new york, at the european economics and financial centre, london, 15 february 2011. * * * it is a great pleasure to be here to speak to you today about recent developments in the u. s. economy. i ’ d like to thank professor hannah scobie and the european economics and financial centre for organizing the seminar in this beautiful historic setting, and thank the member of parliament, geoffrey clifton - brown, for presiding over and sponsoring this meeting. the views i will express are my own and do not necessarily reflect the views of the federal reserve bank of new york or the federal reserve system. i have organized my talk into six observations about the u. s. economy. first, in considering the nature of the recovery from the financial crisis and recession, which many call the “ great recession, ” it is important to take note of the severity of the downturn from which we are recovering. even though the united states has experienced six consecutive quarters of positive growth of real gross domestic product ( gdp ) since the official end of the great recession, the level of output remains well below the business cycle peak. the economic history of such combined financial crisis and recession experiences is that recovery is often slow and protracted ; this one seems no different. hours worked, closely tied to overall economic activity, and personal income excluding transfers ( charts 4 – 5 ) illustrate both the depth of the economic decline and the highly unusual nature of the recovery so far compared with all others in the post - world war ii period. the unemployment rate has declined, but to a large extent this reflects the decline of the labor force participation rate ( chart 6 ). ranges of estimates of unemployment including discouraged workers run as high as the high teens. had the participation rate remained at its business cycle peak level, the unemployment rate would be about 10. 5 percent. core inflation ( excluding energy and food prices ) has declined to a very low level, well below the range of 1 percent to 2 percent that market participants have associated with the fed ’ s desired, “ mandate consistent ” range. low rates of core inflation are of concern because economic research suggests that this is an important indicator of long - term trend headline inflation ( chart 7 ). economic history also suggests that recoveries from financial crisis and recession are fragile. indeed, one disappointment in 2010 was that an initially strong recovery weakened considerably in