corporate credit quality, including notable drops in corporate bond defaults and debt ratings downgrades. moreover, recent surveys suggest that bank lending officers have further eased standards and terms on business loans, and anecdotal reports suggest that securities dealers and other market - makers appear quite willing to commit capital in providing market liquidity. in this environment, long - term interest rates have trended lower in recent months even as the federal reserve has raised the level of the target federal funds rate by 150 basis points. this development contrasts with most experience, which suggests that, other things being equal, increasing short - term interest rates are normally accompanied by a rise in longer - term yields. the simple mathematics of the yield curve governs the relationship between short - and long - term interest rates. ten - year yields, for example, can be thought of as an average of ten consecutive one - year forward rates. a rise in the first - year forward rate, which correlates closely with the federal funds rate, would increase the yield on ten - year u. s. treasury notes even if the more - distant forward rates remain unchanged. historically, though, even these distant forward rates have tended to rise in association with monetary policy tightening. in the current episode, however, the more - distant forward rates declined at the same time that short - term rates were rising. indeed, the tenth - year tranche, which yielded 6 - 1 / 2 percent last june, is now at about 5 - 1 / 4 percent. during the same period, comparable real forward rates derived from quotes on treasury inflation - indexed debt fell significantly as well, suggesting that only a portion of the decline in nominal forward rates in distant tranches is attributable to a drop in long - term inflation expectations. some analysts have worried that the dip in forward real interest rates since last june may indicate that market participants have marked down their view of economic growth going forward, perhaps because of the rise in oil prices. but this interpretation does not mesh seamlessly with the rise in stock prices and the narrowing of credit spreads observed over the same interval. others have emphasized the subdued overall business demand for credit in the united states and the apparent eagerness of lenders, including foreign investors, to provide financing. in particular, heavy purchases of longer - term treasury securities by foreign central banks have often been cited as a factor boosting bond prices and pulling down longer - term yields. thirty - year fixed - rate mortgage rates have dropped to a

and small and micro enterprise development, the co - operative credit union league, the association of co - operative credit union presidents, and members from the credit union movement. during the seven - year consultation period, the central bank made several concessions from its original negotiating position in an attempt to reach out to the credit union movement and to narrow, as much as possible, the existing gap between intention and policy. in fact, when i closed consultations last july, i made several concessions on our negotiating positions in the spirit of compromise and consensus building. by my count, the central bank made more than ten substantial concessions spanning governance, prudential requirements, non - financial services and penalties affecting credit unions. ladies and gentlemen, i must indicate that the draft credit union bill recognizes the cooperative principles, democratic structure, service to members and social goals of credit unions. in developing the legislation, the central bank considered it important that many of the current services and practices of credit unions be maintained. however, we also considered it absolutely necessary that relevant and appropriate prudential limits be put in place and enhancements made for more effective governance. in these two areas of governance and prudential limits, we did not accept several suggestions made by the sector, as they were not consistent with the desired safety and soundness objectives of the credit union legislation. governance requirements the draft credit union bill recognizes that members are the ultimate decision - making body for the credit union. the bill contains provisions for proper governance and effective risk management in order to ensure the safety and soundness of credit unions. credit unions that are sound can best meet the needs of their members, including providing financial services, training members in entrepreneurship and in financial literacy. governance proposals seek to ensure that the directors of a credit union are fit and proper and that the board is effective, accountable and transparent in the management of their credit union. as far as fit and proper goes, the proposed legislation seeks to establish minimum qualifications for board directors. the bill requires that board directors who do not meet the minimum qualification requirements would have to obtain relevant training within a reasonable period of 18 months of becoming a director. today ’ s dynamic financial environment requires persons who are knowledgeable, who understand the complex products being offered as investments, and who can guide the credit union based on an understanding of the environment and the changes taking place. prudential criteria requirements in addition to strong governance, there must be standards, limits and prohibitions which guide the financial management and operations of the credit union