of the nominal interest rate, and the founding of the fed, ” american economic review, vol. 76 ( march ), pp. 125 – 40. - 15 meulendyke, ann - marie ( 1992 ). “ reserve requirements and the discount window in recent decades, ” federal reserve bank of new york, quarterly review, vol. 17 ( autumn ), pp. 25 – 43, https : / / www. newyorkfed. org / medialibrary / media / research / quarterly _ review / 1992 v17 / v17n3article3. pdf. shull, bernard ( 1971 ). “ report on research undertaken in connection with a system study, ” in reappraisal of the federal reserve discount mechanism, vol. 1. washington : board of governors of the federal reserve system, pp. 27 – 77, https : / / fraser. stlouisfed. org / title / reappraisal - federal - reserve - discount - mechanism1206? browse = 1970s. terrell, ellen ( 2021 ). “ united copper, wall street, and the panic of 1907, ” library of congress, inside adams : science, technology & business ( blog ), march 9, https : / / blogs. loc. gov / inside _ adams / 2021 / 03 / united - copper - panic - of - 1907. willis, henry parker ( 1923 ). the federal reserve system : legislation, organization and operation. new york : the ronald press company. a history of the fed ’ s discount window : 1913 - 2000 philip n. jefferson vice chair, federal reserve board davidson college, oct. 8, 2024 disclaimer : the views i will express today are my own and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. roadmap of talk • economic outlook • historical perspective on discount window • request for information figure 4. newspaper illustration from 1893 • panic swirling against banks • public confidence is stopping the waves • banks have a fortress mentality, not lending, isolated rocky mountain times, july 19, 1893 table 1. member banks borrowing continuously for a year or more from reserve banks as of number august 31, 1925 december 31, 1925 december 31, 1926 december 31, 1927 source : bernard shull ( 1971 ), “ report on research undertaken in connection with a system study, ” in reappraisal of the federal reserve discount mechanism, vol

19 lockdown periods. this has provided a financial buffer that has helped to stimulate spending when households have emerged from lockdowns. business investment has also picked up as the economy has recovered. the recovery phase has also seen house prices grow rapidly from already elevated levels. this is partly explained by the stronger than expected domestic economy and associated improvement in job security. looking ahead, we see the level of house prices as unsustainable relative to their fundamental drivers, and have tightened our macro - prudential settings to limit risks to financial stability. 10 while the demand side of the economy has been more resilient than expected when covid - 19 arrived, the disruption to the supply side of the economy has also been more prolonged than anticipated. it has been much harder and more expensive to source finished and intermediate goods from overseas and within new zealand. there have been significant disruptions to supply chains, particularly related to the shipping industry. covid - 19 has also made it more difficult for firms to source labour. the highly uneven impacts across sectors – with the tourism and customer - focussed sectors hardest hit – have made it harder to match employers and employees. international evidence has also illustrated a hesitancy of some to return to the workforce after periods of lockdown, especially in customer facing roles. along with reduced access to migrant workers, these developments are likely to have reduced the level of maximum sustainable employment. 11 all of these factors limit the productive capacity of the economy. given the emergence of more transmissible variants of covid - 19, disruptions to the movement of goods and people globally looks more likely to continue over the medium term, even once a significant proportion of the global population is vaccinated. in response to these lessons on the impact of covid - 19 on both the demand and supply side of the economy, in the latest monetary policy statement we noted that we had more confidence that employment was already at its maximum sustainable level ( figure 3 ) and that pressures on capacity would feed through into more persistent inflation pressures over the medium - term ( figure 4 ). see https : / / www. rbnz. govt. nz / news / 2021 / 08 / house - prices - above - sustainable - levels see the special topic “ the recovery in new zealand ’ s labour market ” contained in the august mps. a least regrets approach to uncertainty : hawks, doves and the white heron ( he kotuku ) figure 3 indicators of maximum sustainable employment ( mse ) source :