donald l kohn : comments on “ financial intermediation and the postcrisis financial system ” speech by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, at the eighth bis annual conference 2009, entitled financial system and macroeconomic resilience : revisited, basel, 25 june 2009. * * * hyun shin and his various coauthors have emphasized in a series of papers that practices within the financial system were hugely consequential for the buildup in risk - taking that preceded the current crisis and for the virulence of the subsequent pullback. in particular, the increase in leverage within the sector, the lengthening of intermediation chains, and the reliance on short - term financing that was subject to runs contributed to the vulnerability of the system and the severe aftereffects of its ensuing collapse. his analysis shows that we can't look through the veil of finance, as was so common in our models and, to a lesser extent, in our thinking. his suggested reforms flow naturally from that diagnosis : constrain leverage, especially in good times, and shorten intermediation chains. 1 i agree that the nature of the chains of interactions within the financial sector and the leverage and maturity mismatches were important factors in the buildup of imbalances and the difficult correction. and addressing these should contribute to a more robust financial system. but, to an extent, leverage was a symptom rather than a cause of the underlying crisis. and i'm not sure the accounting identity shin uses, while a useful pedagogic device, illuminates the interactions within the financial sector and between that sector and the economy that led to the crisis. treating symptoms helps, especially when the disease is complex and difficult to diagnose, but we also need to look for and treat the underlying causes, as i'm sure hyun agrees. in my opinion, the root cause of the problems was the underpricing of risk as the financial sector interacted with nonfinancial sectors. on the lending side of the financial sector balance sheet, underpricing of loans relative to true risk resulted in a buildup of leverage in the household sector that left lenders vulnerable to declines in collateral values and debt servicing capacity. on the borrowing side, households ended up with some assets – like shares in money market mutual funds – that weren't as liquid as they were thought to be ; when

christian noyer : macroprudential policies – implementation and interactions introduction by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, before the bank of france ’ s financial stability review panel ( panel rsf ), new york, 14 april 2014. * * * dear governors, dear colleagues, ladies and gentlemen, i am very proud, today, to launch the 2014 issue of the banque de france ’ s financial stability review on “ macroprudential policies : implementation and interactions ”. since 2002, our review has brought together contributions from prominent academics, practitioners and policy - makers from all over the world on topical issues. this year, macroprudential policy has been one of the focuses of policy - thinking and policy - making and it is likely to be so for some time to come. i am sure that this issue of the banque de france ’ s fsr will provide food for thought and action. i warmly thank all the experts who have contributed to this review for their papers of exceptional quality and depth. i do not have time to mention all of them and only some authors are here with me today. these contributions are very diverse in their assessment and experiences of macroprudential policies. policy recommendations and proposals are sometimes difficult to reconcile but this is what we want to achieve in our fsr. naturally, we don ’ t necessarily share all the views expressed in all the articles, but we do believe in the exchange of ideas. as an introduction to this fsr, we are extremely thankful to the roundtable participants that have accepted my invitation : • a long - standing member of the federal reserve board : governor tarullo, thank you. it ’ s a privilege to welcome you today given your active participation and role in setting international financial regulation ; • a governor of one of the most advanced central bank in the area of macroprudential policy in asia : tae soo kang, deputy governor of the bank of korea, in charge of financial stability. • a very active ambassador for macroprudential policy : jose vinals, financial counselor and director of the monetary and capital markets department of the imf. • a distinguished expert on the financial sector worldwide and its regulation : douglas elliott from the brookings institution. thank you all for being with us today. as you know, for each issue of our fsr, we always try to pick topics that are both analytically complex and relevant to