receive deposits, pay bills, and accrue savings. they also need access to credit to tide them over before their next cash infusion arrives. they may be coming up short paying their rent, their mortgage payment, an emergency medical expense, or an unexpected car repair. they may want access to a savings vehicle that, down the road, will help them pay for these items and for education or further training, or to start a business. and many want some form of non - cash payment method, such as a credit or debit card, to conduct transactions that are difficult or impossible to conduct using cash. products and services that serve these core financial needs are not consistently available at affordable rates to all americans. those with low and moderate incomes may have insufficient income or assets to meet the relatively high requirements of banks. americans without jobs, or with jobs that have slow wage growth, have little, if any, opportunity to establish a credit history that facilitates access to financial services. others, especially in the wake of a recession that put many people out of work and homes, may have dents on their credit records that inhibit their ability to borrow on affordable terms. how the recession undermined financial inclusion the economic crisis has undermined financial inclusion for many americans. low - and moderate - income families entered the recession with little financial buffer against the adverse effects of wage cuts, job loss, and drops in home values. according to the 2007 survey of consumer finances ( scf ), home equity accounted for 75 percent of total assets for low - and moderate - income families, which made them extremely vulnerable to the eventual housing market collapse. sure enough, families in the bottom fifth of the income distribution saw an 18 percent drop in median net worth between 2007 and 2009, going from $ 8, 100 in 2007 to $ 6, 600 by 2009. 3, 4 families in the middle of the income distribution fared bureau of labor statistics. “ the employment situation – may 2011. ” ibid. bucks, brian k., arthur b. kennickell, traci l. mach and kevin b. moore. 2009. “ changes in u. s. family finances from 2004 to 2007 : evidence from the survey of consumer finances, ” federal reserve bulletin, v. 95, pp. a1 – a55. bis central bankers ’ speeches even worse, experiencing a 21 percent decline in the value of their assets, the highest of any group during the same period. combined with widespread unemployment, housing and

norman t l chan : when markets fail speech by mr norman t l chan, chief executive of the hong kong monetary authority, at the 6th caixin summit 2015, hong kong, 6 november 2015. * * * 1. the topic of my speech today ( “ when markets fail ” ) is a little controversial as there are some who do not accept the premise that markets can fail. they believe that markets are capable of self - correcting and will eventually achieve the most efficient price discovery and resource allocation. however, i have some reservations about this notion because our experience tells a slightly different story. markets do sometimes fail to perform their price discovery and resource allocation functions. in some more serious cases, market failures have even led to destabilising financial shocks and crises. 2. indeed, the 2007 – 08 global financial crisis, which ravaged the us and europe, clearly repudiates the general belief that market failures and financial crises will only occur in third world countries or underdeveloped economies. on the face of it, the bursting of the us property bubble triggered the collapse of the subprime mortgage market, which in turn led to the financial crisis in the us. however, if we look more deeply, we find that prior to the crisis, the banking and financial systems had been churning out a great number of subprime mortgage - backed securities. in addition, various derivative instruments using subprime mortgage - backed securities as underlying assets, like cdo2 and cdo3, added layers of risks like snowpack. the subprime mortgage crisis precipitated an avalanche that nearly buried many financial institutions with tremendous losses. obviously, human greed was at play. but this was not a sufficient explanation. human greed has always existed. why then had the us financial market sleepwalked toward the brink of collapse? whenever an asset or credit bubble forms, many bewildered market participants are often of the view that it will be different to previous bubbles, and that the market boom is well supported by fundamentals. “ this time is different, ” so they say. in my view, the main cause of the market failure and near meltdown of the market was the collective failure of the various “ safety valves ” that maintain the orderly operation of the market. they include the internal risk control functions of financial institutions, the external discipline imposed by regulators and the ratings assigned by international credit rating agencies ( cras ), etc. in fact, it ’ s worth noting that many of the