Markets for Treasury securities and agency mortgage-backed securities, which are normally highly liquid and form the bedrock of our financial system, nearly buckled under the strain of massive flows of funds in response to the pandemic.3 It’s easy to think of financial markets as somewhat divorced from the real economy—most people will never need to worry about a spike in the repo rate or liquidity in the Treasury market. But the reality is that like the events of 1907—and more recently 2008—turmoil in financial markets can have a devastating impact on the wider economy. If credit isn’t flowing, people can’t finance the purchase of a home, businesses can’t invest, and nonprofit organizations and municipalities can’t keep essential services going. This is why safeguarding the functioning of financial markets is essential for the health of the broader economy. In response to the extraordinary volatility caused by the pandemic, the Fed greatly expanded its repo operations and began purchasing sizable quantities of U.S. Treasury securities and agency mortgage-backed securities. These actions to provide massive liquidity have proven successful. They restored market functioning and averted what could have been a much more severe pullback from markets and the flow of credit to households and businesses.4  Deploying Our Tools In addition to the repo operations and asset purchases, we have established a number of programs to support the flow of credit to households, businesses, and state and local governments.5 I won’t go into detail about all of the facilities, but I will emphasize two important points.

Keynote Speech “Strengthening ACMECS Integration through Financial Cooperation” ACMECS CEO Forum Dr. Veerathai Santiprabhob Governor of the Bank of Thailand Friday, 15 June 2018 Shangri-La Hotel, Bangkok  Excellencies, Distinguished guests, Ladies and gentlemen, Swasdee krub, First of all, I would like to take this opportunity to thank the leaders of the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) and the organizers for the opportunity to speak at this very important forum. I believe the ACMECS and the Bank of Thailand share a common goal, a goal of promoting economic and financial developments to ensure sustainable well-being of our people. Certainly, our region has immense potential from growth perspectives, with abundant natural resources to population primed to embrace new economic opportunities. Just as important is the development of our financial systems to unlock the potential of our people and support growing intraregional trade and investment. A well-functioning financial system is a critical foundation for us to achieve our common goal. To establish suitable financial environment, financial development policies in the ACMECS region must focus on three key words of productivity, immunity, and inclusivity. Productive financial sector enables efficient resource allocation critical for raising the productivity of the economy as a whole. Maintaining a resilient financial system allows for smooth functioning of the financial market, improves risk management, and keeps systemic risk at bay. And, an inclusive financial system ensures that the benefits from economic growth can be shared fairly across the whole society, fostering stable social and economic environment conducive for sustainable growth.