of the story. in the united states, for example, capital expenditures have been restrained for some time relative to the very substantial level of corporate cash flow. that development likely reflects the business caution that was apparent in the wake of the stock market decline and the corporate scandals early this decade. in similar fashion, japanese investment exhibited prolonged restraint following the bursting of japan's speculative bubble in the early 1990s, and investment in emerging asia, excluding china, fell appreciably after the asian financial crisis in the late 1990s. the economic forces driving the global saving - investment balance have been becoming manifest over the past decade, so the steepness of the recent decline in long - term yields suggests that something more may have been at work over the past year. according to includes second homes that are not rented, vacant homes for sale, and vacant land. 1 / 5 estimates prepared by the staff of the federal reserve board, a significant portion of the more recent decline appears to have resulted from a fall in term premiums. such estimates are subject to considerable uncertainty ; nevertheless, they suggest that a perceived increase in economic stability in recent years has encouraged risk - takers to reach out to more - distant time horizons. regardless of the precise mix of factors that explains the decline in interest rates, the associated run - up in housing values has left households with a substantial pool of available home equity. according to data recently developed by jim kennedy of the federal reserve board staff, and me, discretionary extraction of home equity accounts for about four - fifths of the rise in home mortgage debt. 2 our data splits home equity extraction net of closing costs, and hence debt increase on existing homes, into extraction from three sources : ( 1 ) that associated with home turnover - that is, mortgage originations of buyers of existing homes less the associated debt cancellation of sellers, ( 2 ) refinancing cash - outs, and ( 3 ) increases in home equity loans. the size of equity extraction owing to turnover closely parallels and presumably finances the realized capital gains on homes, whereas cash - outs and home equity loans generally extract as - yet - unrealized capital gains. what share of the financed capital gains are spent on consumer goods and services, thereby reducing the saving rate, is uncertain. 3 survey data suggest that approximately a fourth to a third of the value of home equity loans and cash - outs finances personal consumption expenditures directly. 44 another fourth funds repayment of nonmortgage debt that had been used,

##y our newest innovation, electronic money, or more generally, our increasingly broad electronic payments system. to develop new forms of payment, the private sector will need the flexibility to experiment, without broad interference by the government. our most intriguing challenge is whether new technologies can provide improved financial services and, at the same time, provide greater privacy and related benefits. flexibility by industry, consumers, and government may help make such overall advances possible. finally, i want to emphasize that the information age is not something to be feared, but may well be a vast opportunity. personal computers, an array of software, and new communications channels have placed powerful and creative technologies directly into the hands of individuals. the current enthusiasm of society for science and technology, particularly among young people, holds great promise for the future. if history is any guide, it is from this enthusiasm that the future will be born.