, among others, are advancement of technology and hence availability of information resource that enables sound business decisions to be made across countries in a timely manner. every business manager knows that regardless of the size of your business, use of and reliance on technology to produce information upon which business decisions are made is a crucial part of operating a successful business, whether they are small and medium enterprises or a large corporation. papua new guinea ’ s experience the government of papua new guinea had developed a number of policy papers including, small and medium enterprises policy, medium term development strategies ( mtds ), the national dialog and microfinance policy. in these policy papers, the government had expressed the important roles of small and medium enterprises as contributors to the long - term sustainable development of the private sector and economic growth of the country. like in most countries, small and medium enterprises in papua new guinea are not regulated, however, they are required to operate in compliance with the relevant laws of the country including taxation requirements. in order for the small and medium enterprises to be successful, adequate government support through agencies tasked with this function need to be enhanced. this would ensure that the small & medium enterprises develop beyond their infant stages and reach selfsustainable levels. finance there are relatively limited credit and supplementation institutions and financial institutions that are willing to provide credit to small and medium enterprises in the country. the problem is even harder for the government - funded credit and supplementation institutions like the rural development bank to meet their credit needs because of the limited annual budget appropriation. the development of the microfinance sector through the png - adb microfinance and employment project is an extension of the options that the government wanted to pursue, through the microfinance policy, to extend credit to those in the informal and semi - formal sectors. credit guarantee and facility schemes credit guarantee schemes seemed to have limited success in papua new guinea ’ s situation, perhaps partly because such schemes are not fully appreciated and understood. the problem also extends to include the government or its institutions that provide guarantees to small and medium enterprises where in most cases such guarantees are not honoured, giving rise to other issues ( e. g. prudential supervision ). papua new guinea ’ s problem appears to do with perception and expectations. for instance, where a guarantee is provided based on political associations and constituency, those who benefit from the credit facility may feel less inclined to repay the credit because they perceive such service by the government or their political leaders as a

zero ( or even slightly below zero ) in many advanced economies to support recovery and assist in balance sheet repair, and they still remain at those levels. in europe, significant institutional reforms are being made to strengthen the stability of the euro area ; these are aimed at getting banking and crisis - management arrangements across the area to function in a more unified way that makes them more robust to shocks in the future. and globally, there is an extensive program of reform underway, for example in banking and securities regulation, to build resilience in our financial systems. australia has been very much a part of that process. a related development in this period is that there has been a renewed interest in more proactive approaches to the management of systemic risk. partly this reflected the lesson from the gfc itself that financial crises are costly, and hence that there is a strong need for better risk management. in keeping with that, institutional arrangements have been strengthened in some jurisdictions to support more proactive risk management by supervisors, where that was found to be lacking. a related point is that, in a low interest rate environment, supervisors have seen a need to be particularly vigilant against a build - up of risk in interest sensitive sectors. a number of them have been taking measures in recent times to respond to developing risks, often focused on property lending. i will have more to say about that later. to summarise ( and oversimplify ) this picture somewhat, the after - effects of the gfc on the global economy have included : reinhart cm and k rogoff ( 2009 ), this time is different : eight centuries of financial folly, princeton university press, princeton. bis central bankers ’ speeches • an extended period of low interest rates • “ search for yield ” behaviour by investors in some interest - sensitive sectors, and • a strengthened focus on risk management by prudential supervisors. recent developments with all of that as background, i want to turn now to our assessment of the evolving risk environment over the past six months, and here i draw on some key messages from our recent review. it is useful to take that subject in three parts : • the global risk environment ; • possible implications of that environment for australia ; and • domestically generated sources of risk. the global risk environment as i have already mentioned, much of the attention from a financial stability point of view over recent years has been on europe. there has been a particular focus on greece, and on potential spillovers from greece to other parts