- risk assets. as a result, this reallocation was expected to bring about somewhat lower rates on treasury bills and repo backed by treasury collateral, and somewhat higher unsecured rates. it is important that the monetary policy implementation framework take note of changes to the broader financial market landscape, including its regulatory structure, and adapt as necessary in response to such changes. ahead of the reforms, our focus, which i discussed in a speech in early 2016, was on whether the reforms would have an impact on the transmission of monetary policy that might require such adaptation. in particular, we wanted to observe whether markets remained sufficiently competitive to allow for robust control of rates, and see whether the shifts in volume — particularly the anticipated upswing in demand for government - fund - eligible assets — would impair competition. 12 we also wanted to see whether linkages across markets remained strong enough to ensure that policy was transmitted in accordance with the fomc ’ s forecasts, especially given prime funds ’ broad investment scope, and their ability to reallocate across markets according to relative value. 13 the size of the reallocation ended up being quite a bit larger than most had expected. as shown in ( figure 4 ), about $ 1 trillion of assets had migrated from prime to government funds by late 2016. this resulted in a major reallocation of the investments held by the money market fund industry, shown in ( figure 5 ). this reallocation had far - reaching effects on the structure of money markets, as described in a recent blog by some of my new york fed colleagues. 14 for example, banks that were relying on the funding by prime funds had to find other institutions that would be willing to lend to them. government funds, which received large inflows, had to place the additional funds they had received, for example into treasury or agency securities or into repo. such a large change in funding flows could have created significant movements in money market interest rates. the good news is that the on rrp facility served as a shock absorber for overnight rates. as shown in ( figure 6 ), money market funds, particularly government funds, increased their use of on rrp during the transition. because of the availability of on rrp, government funds knew they would be able to temporarily place some of the new funding they received at the on rrp facility while they were looking for new investment opportunities, and prime funds knew they would have access to a very secure and liquid overnight investment

continent most affected by geophysical events, where typhoons, earthquakes, landslides and flash floods accounted for 43 % of all events worldwide and for 74 % of fatalities. while storms and droughts have long been familiar to this region, they have become more intense, more prolonged and more frequent. this translates into greater economic loss for governments, businesses and households – which in turn, can make its way into the financial system. evidence of these effects can clearly be seen from recent events : the thai floods in 2011 cost usd45 billion in damages and affected 240, 000 small businesses. carmakers in malaysia, japan and the us had to slow down production due to the interrupted supply of parts from thai factories. prolonged supply chain disruptions, which took months to recover, had direct financial and economic implications – thai exports fell, its budget deficit widened and the economy shrank by around 2 %. the total cost to the thai economy was much higher if we account for the cost of repairs, rebuilding and mitigation measures to prevent a repeat of the disaster. 1 / 5 bis central bankers'speeches closer to home, the floods that hit kelantan and terengganu in 2014 were among malaysia ’ s worst ever. more than 200, 000 people were affected and displaced. businesses and financial institutions had to temporarily shut their operations. economic activities and financial intermediation were disrupted. the government spent over rm2 billion to rebuild basic infrastructure, such as roads and schools. the average cost to individual households was estimated to be more than two years of income for their breadwinners. in 2017, massive floods in penang and kedah saw similar effects. banks also bore the costs of moratoriums on loan repayments that were provided to those affected by such disasters. as climate - related events intensify, these costs will escalate. as a result of the severe and prolonged el nino drought in 2016, the agriculture sector in malaysia shrank by 5. 2 %. last year, adverse weather ( and production constraints ) dented yields yet again, causing the sector to contract by up to 2. 5 % in the second quarter. this is not an isolated problem for the agriculture industry. these shocks can also jeopardise domestic food production and cause prices to inflate. for instance, the irregular weather and prolonged haze conditions in 2015 caused the prices of fresh vegetables to rise by 7. 7 %. climate change can also affect the economy structurally and gradually. we know that