glenn stevens : finance and economic development in australia address by mr glenn stevens, governor of the reserve bank of australia, to the committee for economic development of australia ( ceda ) annual dinner, melbourne, 12 december 2006. * * * it is a great pleasure to be invited to address the annual general meeting of ceda, continuing a long tradition of such addresses by governors of the reserve bank of australia. ceda – the committee for economic development of australia – began in 1960, an initiative of d. b. copland. copland, one of australia ’ s most remarkable economists of the depression era, was a member of ‘ giblin ’ s platoon ’, whose history is recorded so nicely in the recent book of that name. 1 ceda has over the years made a substantial contribution to debate in a number of fields, from trade policy to taxation policy, from indigenous affairs to infrastructure. interestingly enough, the list of publications on ceda ’ s website does not include any which are overtly financial in their focus. i do not say this as a criticism – perhaps the reason you have invited central bank governors to speak so regularly is to cover that very set of issues! but it seems appropriate, given ceda ’ s core focus on economic development, to address the questions : what is the role of finance in economic development and growth? how does the financial system contribute? how can financial events sometimes be detrimental to economic growth? what can be done to ameliorate those risks? what risks do we face at present? history the growth we take for granted in the modern world is actually a fairly recent phenomenon in human history. prior to the industrial revolution in western europe, living standards rose, if at all, very slowly. according to angus maddison ’ s data, the real per capita gdp of the united kingdom rose between 1500 and 1820 at an average rate of only 0. 27 per cent per annum. 2 at that pace, living standards doubled about every 250 years. in other words, a person would not live all that much better than their grandparents – assuming they could discern any difference. from 1820 to 1913, the rate of increase rose to 1. 15 per cent. that ’ s a very big change. at that pace, living standards doubled in about 60 years. in the 20th century – despite wars, the great depression, the great inflation and various other problems – growth per head rose further. australia ’ s per capita growth was 1. 70

glenn stevens : still interesting times address by mr glenn stevens, governor of the reserve bank of australia, to the chamber of commerce and industry ( western australia ) and the chamber of minerals and energy ( western australia ) corporate breakfast, perth, 7 september 2011. * * * it is very good to be with you this morning. in the process of deciding a title for this address, i recalled that three years ago i was talking in public addresses about the times being interesting, perhaps a little too interesting. that still seems to be the case, hence the title. as you know, yesterday the reserve bank board met here in perth. the board reviewed the international and local information to hand since its last meeting, and decided once again to leave the cash rate unchanged. the reasons for that decision were given in the statement released following the meeting. more information on the nature of the discussion and considerations the board took into account will be published in the minutes of the meeting, two weeks from yesterday. i do not want to dampen any of your undoubted eager anticipation for what may be contained in those minutes. what i will do is say a little more about the sequence of decisions the board has taken over recent months. to do that in appropriate context, it is worthwhile first recounting the framework for monetary policy that has been in operation since the early 1990s and that continues to guide the decisions of the board. so i will say something about that. then i will describe how the flow of recent events, viewed through that framework, has had a bearing on decisions. the framework for monetary policy the framework for monetary policy is a medium - term, flexible inflation target. it seeks to achieve a rate of increase in the consumer price index of between 2 and 3 per cent, on average, over time. this arrangement has a fair bit of history now. the reserve bank began to articulate it in the early 1990s and it has been formally agreed between successive treasurers and governors, in published statements, beginning in 1996. 1 the “ on average ” specification allows the bank to take account of the fact that it cannot finetune inflation over short periods, and of the obligation to promote, insofar as monetary policy can, full employment, which is another of the bank ’ s charter obligations. having a numerical goal takes account of the importance of inflation expectations, and seeks to provide an anchoring point for them – which is a critical function of any monetary policy regime. it also provides a focal