extent to which maturity transformation and financial intermediation had migrated outside of commercial banks. the growth of what we call the shadow banking system occurred largely without the types of safeguards – robust prudential regulation, deposit insurance, lender of last resort – that have safeguarded the commercial banking system from the types of widespread panics and runs that are capable of destabilizing the financial system. the systemic risk created by this gap in coverage was not well recognized by regulators or the private sector prior to the global financial crisis. market participants had little incentive to internalize the negative externality of the run - risk created by their collective choice of finance, and they made erroneous assumptions about the liquidity of asset markets and the capacity and willingness of banks to distribute central bank liquidity to the wider financial system during periods of stress. because the boom years resulted in strong earnings, low price volatility and few credit losses, firms were able to operate at extreme levels of leverage. when housing prices started to decline, the vulnerabilities of this type of business model soon became apparent. heavy reliance on short - term wholesale funding exposed the system to a series of intertwined downward spirals in asset and funding markets. this spread in waves. it began in the market for asset - backed commercial paper ( abcp ) issued by off - balance - sheet conduits, and spread via auction - rate securities to the repo, money market and financial commercial paper markets that formed the core financing for market - based financial intermediation. initial declines in asset prices especially for mortgage related assets forced leveraged holders with maturity mismatches to sell assets. this increased price volatility and further reduced the value of the assets that collateralized other firms ’ borrowings. higher volatility led banks and secured lenders to raise margins, while concern about counterparty risk and their own funding needs made banks reluctant to on - lend liquidity. the resulting higher margins on repo and increased collateral calls due to credit ratings downgrades reduced the quantity of assets that could be financed in repo markets and elsewhere, prompting further asset sales. as wholesale investors started to exit, this set in motion a bad dynamic – a fire sale of assets that cut into earnings and capital. this increased the incentives of investors to run and for banks to hoard liquidity against the risk that they could themselves face a run. this downward spiral of fire sales and funding runs was a key feature of the financial

manager in the same jurisdiction, which provides greater ease of regulatory compliance and access to tax treaties. c. third, we will continue to deepen the pool of investors and asset owners based in singapore. i. these range from large institutional investors and sovereign wealth funds, to smaller family offices and high net worth clients. ii. we welcome investors from over the world, including those who set up family offices here, to tap on our investment ecosystem. 6 / 7 bis - central bankers'speeches iii. we are also heartened to see financial institutions enhancing their capabilities in singapore in order to better seize opportunities here. 1. for example, blackstone has expanded its private equity team in singapore to support its investments in this region, as they see singapore as an important centre for institutional and individual capital raising as well as the investment gateway to southeast asia. iv. singapore also offers a diverse base of professional advisors and service providers to support complex transactions, including secondary deals which are highly intermediated and involve multiple counterparties. conclusion let me conclude. even as geopolitical tensions between the us and china cloud the investment climate, asia – and in particular, asean – offers significant potential for growth. a. in this regard, private capital can play an important role in shaping the future of this region, especially through supporting local enterprises, enabling the carbon and energy transition, and stimulating the growth of the digital economy. b. singapore, at the heart of southeast asia, offers the ideal platform for private market players to make inroads into the region. many investors assess potential investments on esg, or environmental, social and governance. i encourage this community here today to explore how we can mobilise private capital for eesg, or environmental, economic and social good. this way, we can not only boast of private capital, but also of progressive, productive and purposeful capital. with that, i wish you all a fruitful conference and a pleasant stay in singapore. thank you. 7 / 7 bis - central bankers'speeches