donald l kohn : restoring financial intermediation by banks – the role of regulators speech by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, at the office of thrift supervision national housing forum, washington dc, 8 december 2008. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system ’ s website. * * * i thought i might use these brief introductory remarks to put some of our challenges as regulators in the broad context of the tremendous shifts in the pattern of financial flows that we are witnessing. traditionally, funds have been channeled from savers to borrowers in two ways : through financial markets and through financial intermediaries, such as banks and savings institutions. the turmoil in the u. s. financial system during the past 16 months has put both channels of financial intermediation under great strain and, in doing so, has produced a significant financial crisis. large losses taken by financial institutions and investors, mostly from mortgage - related assets, have increased uncertainty and undermined confidence ; these events have caused lenders to greatly tighten credit conditions for households and businesses, which, in turn, have contributed to a downturn in the economy that has reinforced the strains in the financial system. 1 one consequence of the distress in financial markets is that banks are being pushed to take a greater role in financial intermediation, which reverses, in part, a long - term trend away from bank - based financial intermediation and toward market - based intermediation. and, indeed, bank lending surged earlier in the fall following a lull over the summer. however, the degree to which the pickup represented deliberate choices by banks is unclear, as many households and businesses reportedly drew on previously committed lines of credit, and selling of loans in securitization markets was hampered by further deterioration in those markets. in recent weeks, bank lending appears to have dropped back, consistent with the significant tightening of terms and standards reported by bank loan officers in recent quarters as well as the weakening of economic activity. the need for greater bank intermediation has occurred at a time when banks are managing losses and are worried about meeting their funding needs. concerns about banks'creditworthiness have made it costly for them to issue long - term debt. growth in bank deposits has been fairly strong this year, and the recognition that deposits can be a reliable source of funds protected by the federal safety net has perhaps

indian ocean coalesce to make us highly vulnerable to weather - related hazards. i won't be thrifty on the use of harsh verbiage here : but events that would, in the past, occur once - every1000 years can now materialize once - every - five years. thus, we should be on our guards and have the wherewithal to accept apocalyptic scenarios as a fact of everyday life. 1 / 6 bis - central bankers'speeches the climate crisis represents an existential threat to humanity due to its manifold, longlasting and far - reaching consequences that easily cut across various aspects of our lives. at a time when the covid - 19 pandemic still serves as a poignant reminder of what an enormous shock of unimaginable proportions can do, we need to stand ready to accept the fact that the climate crisis, if mishandled, can generate shocks of even greater magnitude than the pandemic. we, ostensibly, can do what we can do. scientists and so - called climate change experts have attributed the bulk of the genesis behind weather - related disturbances to human action. and that's where the lion's share of efforts must be geared towards. we must reduce our environmental footprint or else risk another global crisis that could sprawl beyond control. remember that no vaccines can ever be developed as immunization strategies against climate change, unlike the pandemic! the focus on esg and sustainability is, therefore, timely as both the economic and environmental landscapes are now marred, among others, by extreme weather conditions and biodiversity loss. in this respect, at the corporate level, ownership, accountability and responsibility of the issues at hand should be showcased at the very top level. indeed, corporate boards and senior management are the cornerstones for responding with alacrity by activating a corporate culture built on strong ethical considerations that epitomises inclusiveness and sustainability. looking at the turnout this morning, i can easily sense that the topic has garnered the required attention on the agenda of your respective boards. ladies and gentlemen while the public sector has a significant role to play in charting out the main contours and leading by example for accelerating the transition to a green economy, much of that transformation will, nevertheless, be investor driven. mauritius requires funding of usd 6. 5billion for meeting its nationally determined contributions which would entail a reduction in our greenhouse gas emissions by 40 per cent by 2030. the government and domestic