asset - backed commercial paper by conduits created to acquire and hold securities. both demand and supply factors drove the increased use of short - term wholesale finance. on the supply side, the growth of savings from corporations and institutional investors in need of deposit - like products in which to place their cash balances created a plentiful source of funds. these products were viewed as “ safe ” since, after all, the funds were only exposed for a short period of time, and in the case of repo, they were secured by collateral. on the demand side, setting aside any possible instabilities in this funding source, it was more profitable to use shorter - term funds to finance longer - term assets. in fact, the growing reliance on short - term wholesale funding to finance longer - term assets increased liquidity and maturity mismatch risk in the financial system. this was particularly dangerous because many of the assets being financed were structured - credit products, some of which were opaque, difficult to value and illiquid. in periods of market stress, these features increase the run risk by funding providers. bis central bankers ’ speeches short - term funding of longer - term assets is inherently unstable, especially in the presence of information and coordination problems. it can be rational for a funding provider to supply funds on a short - term basis, reasoning that it can exit if there is any uncertainty over the firm ’ s continued ability to roll over its funding from other sources. but, if the use of short - term funding becomes sufficiently widespread, the firm ’ s roll - over risk increases. in this situation, there is a strong incentive for each lender to “ run ” early if there is any uncertainty that could undermine the borrower ’ s ability to continue to roll over its funding from other sources. this is the case even if the provider of funds believes that the borrower would remain solvent as long as it retained access to funding on normal terms. the cost of running when it turns out to be unnecessary is small relative to the cost of not running when it turns out to be prudent. of course, this insight is not a new one. prior to the establishment of a lender of last resort and retail deposit insurance for banks – which came with the quid pro quo of prudential regulation – bank runs were a regular and disruptive feature of our financial system. these innovations solved the coordination problem and stabilized this source of funding. what was new prior to the crisis was the

john c williams : opening remarks – “ racism and the economy : focus on health ” remarks ( via prerecorded video ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at “ racism and the economy : focus on health ”, 9 september 2021. * * * as prepared for delivery good afternoon, and welcome everyone. i ’ m john williams, president and ceo of the federal reserve bank of new york. i ’ m here to kick off what is now the eighth installment of a landmark series on the topic of racism and the economy sponsored by the 12 federal reserve banks. these events examine structural racism ’ s toll on the economy and identify potential actions that can improve economic outcomes for all segments of society. there is no facet of our society immune to racism, health included. so, this afternoon, we will be looking at key issues around race and the economy through the lens of health — a focus never more urgent and critical. before we move on with the program, i ’ d like to share more broadly why this is so important for the federal reserve, what we ’ re learning, and what we ’ re doing. and with that, i must give the standard fed disclaimer that the views i express are my own and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. having poor health is a challenge on many levels. we ’ re keenly aware that health can be a huge driver of economic inequality. people who lack good health or healthcare often struggle to participate fully in the economy. on top of that, social determinants of health — economic stability, housing, and education — can be barriers to employment and affect the kinds of jobs people get. of course, we at the federal reserve are neither healthcare workers nor healthcare policymakers. but a major part of our core mission is to foster a strong economy and promote maximum employment. and to put it simply, we need healthy people to have a healthy economy and workforce. that ’ s why understanding the nexus of race, health, and the economy is central to achieving our goals. we are deeply committed to doing so, both in this series and beyond. the pandemic demonstrated just how acute many of the connections are between physical and economic health for individuals and communities. and it exposed just how dramatic racial disparities can be, especially in accessing healthcare and other critical resources. the convergence of a health crisis