for the implementation of monetary policy ; and, of course, as a cost - effective mechanism to help finance u. s. government activities. today's conference provides an excellent opportunity to discuss topics like this one, and to bring together diverse perspectives from across the treasury market and the official sector to consider the best path forward to promote treasury market resilience. thank you all for joining us today. 1 i would like to thank leon barker and ellen correia golay for their assistance in preparing these remarks. 2 / 2 bis - central bankers'speeches

william c dudley : fixing wholesale funding to build a more stable financial system remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york and chairman of the committee on the global financial system ( cgfs ), at the new york bankers association ’ s 2013 annual meeting and economic forum, new york city, 1 february 2013. * * * as prepared for delivery. thank you for having me here to speak today. as you all know from daily experience, the financial system plays an essential role in modern economies. because financial intermediation is critical to economic activity, disruption to it can cause severe damage to the economy. the experience of recent years revealed serious flaws in the system. risk was mispriced and there was a build - up of excesses before the crisis. structural weaknesses in the financial system then amplified the effect of the bursting of the bubble in u. s. house prices, and the result was a widespread financial crisis. one critical factor was the extensive use of short - term wholesale funding in the years leading up to the crisis. not only did this aspect of our financial system create the potential for a firm to fail in an extraordinarily rapid manner when faced with a loss of market confidence, but it also served as a channel through which the effects of those failures were widely propagated throughout the broader financial system. although much has been done over the past few years to mitigate the structural flaws that make wholesale funding a point of weakness in the global financial system, some important issues and vulnerabilities remain. i will focus my remarks today on some of those vulnerabilities – including the areas of tri - party repo and money market mutual funds markets – and discuss what could be done to make wholesale funding markets more stable. 1 i will also consider the larger issue of the appropriate role of wholesale funding in the financial system. how comfortable should we be with a system in which critical financial activities continue to be financed with short - term wholesale funding without the safeguards necessary to reduce the risk of runs and the fire sales of assets that can threaten the stability of the entire financial system? as always, my remarks reflect my own views and not necessarily those of the federal reserve system. wholesale funding as a structural vulnerability as this audience knows, in the two decades before the financial crisis, the global financial system underwent rapid transformation. during this period, there was a shift from bank - based financial intermediation to capital markets