a prolonged period. of the major countries, the united states was the first to raise rates, with the fed beginning to tighten in mid 2004. the european central bank has only just started the process in recent months and the bank of japan is not expected to start lifting rates for some time yet. thus, even though the fed has now restored the funds rate to a relatively normal level of 4. 5 per cent, world policy interest rates on average remain well below normal. another unusual aspect of current global interest rates is that long - term rates, which are set by the demand for and supply of funds in capital markets, have remained quite low in the face of rising official interest rates. although various explanations have been put forward for this unusual behaviour, the most likely cause is an ex ante excess supply of savings relative to investment around the world, with asia accounting for a large part of the excess global savings. for equity markets, the combination of low interest rates, strong economic growth and low inflation has proved very beneficial, with global share markets rising solidly in each of the past three years. this has been underpinned by strong growth in profits so that, notwithstanding the rise in share prices, p / e ratios have been declining on average. it is worth noting that the australian share market has behaved quite differently from the global market over the past decade. it was affected much less than most markets by the tech bubble and the subsequent collapse, and in recent years has been rising faster than average. along with the canadian share market, it is the only major market that is currently above earlier peak levels, whereas in europe and the united states share markets are still about 20 per cent below their early 2000 peaks. the australian dollar has remained in a relatively steady range over the past couple of years, at levels that are a little above average against the us dollar and about 10 per cent above average in tradeweighted terms. some people have found this steadiness puzzling against the background of very strong rises in commodity prices and the terms of trade, as such episodes in the past have been associated with strong rises in the currency. a key to understanding the different behaviour on this occasion is the change in the interest differential with the united states. this has narrowed appreciably over the past 18 months because the fed has tightened much more than we have. domestic credit and debt in recent years we have given a lot of attention to the growth of household debt and its possible effects on the macro economy.

responsive regulator requires connection. improved engagement and listening to the perspectives of others helps us to understand better risks posed to the financial system, as well as helping households and businesses to understand our approach to policy and regulation. regulation is about supporting positive outcomes next, and to state the obvious, it is important that leaders are clear about the outcomes they want to achieve. in my view, regulation is about supporting positive outcomes. regulation should follow six principles. it must be forward looking, connected, proportionate, predictable, transparent and agile : forward - looking because, although we need to learn from history, we need to prioritise regulating for the future, especially as the pace of change means it quickly becomes the present ; connected because, in a european and global financial market, being more connected with market participants – whether firms, other regulators, consumers and investors – is essential to better understand risk, and to support agility and foresight in how we regulate ; proportionate, because we want regulation to address the harm or failure on which it is aimed without causing unintended consequences. there needs to be 4 / 7 bis - central bankers'speeches an effective and disciplined consideration and weighing of the costs, benefits and trade - offs involved in any regulatory intervention so that we avoid creating distortions and sub - optimal outcomes ; predictable, because consumers, investors and firms need to understand what we're trying to do, and what it is we expect others to be doing ; transparent because building trust in the financial system requires that market participants are able to see that regulators are doing their job and regulations are working as intended. and last and very much not least, agile, because the financial system has shown us that it can change quickly, that it is changing quickly and that it will continue to change quickly. regulation needs to adapt to a changing risk environment at a similar pace. ultimately financial regulation is about supporting the economic wellbeing of the community as a whole. such outcomes may be reasonably intuitive to describe but fundamentally they involve a stable financial system, trust and confidence in financial markets, and ensuring fair treatment of consumers. of course there are challenges and trade - offs to make in delivering effective regulation which i am sure will be discussed in the course of this conference. our ambition : the welfare of the european people as a whole so what, as leaders working at the ecb and ssm, is our ambition? at the central bank of ireland our mission is to serve the public interest by maintaining monetary and financial stability