i j macfarlane : monetary policy in an uncertain world talk by mr i j macfarlane, governor of the reserve bank of australia, to ceda annual general meeting dinner, melbourne, 13 november 2002. * * * this is the fourth time i have addressed ceda ’ s annual general meeting in melbourne, and following the practice adopted on earlier occasions, i would like to focus on a topic of current interest. last time i was here two years ago, i devoted the whole speech to the exchange rate. this time i have found no need to mention it, as there are other more important things on our mind and, i think, of more interest to you. last year - that is, calendar 2001 - was a difficult year for the world economy, in particular for the g7 countries, where over the course of the year output declined. so for the developed world it was a recession year, although a mild one by past standards. monetary policy was eased virtually everywhere, particularly towards the end of the year when confidence about the future course of the world economy declined further following the events of september 11. as you know, the australian economy grew very well during the international contraction of 2001, although we looked abroad and to the future with some apprehension. as the year 2002 began, it appeared that the worst fears for the future had evaporated. the us economy was always likely to enjoy only a relatively modest recovery, but appeared to be making a pretty quick turnaround, exceeding even the most optimistic forecasts, and confidence picked up - not only there, but in europe, and even for a time in japan. those countries with strong domestic fundamentals - such as australia, canada, sweden and new zealand - began the process of getting their interest rates back to levels that were more commensurate with their domestic needs. but in about the middle of the year this confidence about the recovery of the world economy began to wane, and one of the consequences was that the upward adjustment of interest rates by the countries with strong domestic fundamentals was discontinued. i would like to spend some time examining this period from the middle of the year in more detail to see what it tells us about the future of the world economy. the outlook for the world economy a good way of illustrating the change in outlook is to see how consensus forecasts for 2002 and 2003 for the major economies - the united states, the euro area and japan - have been adjusted since mid year. the first thing to notice is

##p efforts of the systemically relevant infrastructures and their major participants. moreover, the report contains concrete requirements for the different players and identifies room for improvement in various respects. one measure, which has meanwhile already been implemented, concerns the creation of an alarm and crisis organisation that spans the entire financial sector. the final conclusion that can be drawn is that it is the responsibility of the individual company to ensure information security. regulation, oversight and supervision play only a secondary role. information security deserves to be accorded appropriate priority by every board and every management, regardless of whether the company is a global player or a small savings bank.