the economic development. there are prospects of lower wage inflation than in previous years. which we welcome. but there are hardly prospects of a change in the competitive environment. changing real wage expectations after a period with a strong labour market is an uphill struggle. and it also clearly highlights the problems arising when demand reaches unsustainably high levels. * * * financial conditions are very expansionary amid historically low short - term interest rates. adjusted for tax and inflation, the real interest rate on an adjustable - rate mortgage is currently very low. this supports the housing market. in our judgement, the housing market is slowly recovering, and price adjustments are done at the current low interest rate level. budding optimism is seen among potential buyers. i usually refrain from official predictions of interest - rate developments. but today, i will make an exception. i am quite sure that rates on 1 - year adjustable rate mortgages cannot be sustained at the current low level. i will not try to predict when it will rise. but i advise homeowners and others against stretching their budgets so tight that they can only make ends meet at the current very low interest rate level. normalisation of interest rates and rising unemployment may present a certain risk to the development. if the low growth continues in the euro area in the coming period, the normalisation of interest rates will be postponed. by contrast, stronger economic growth could cause interest rates to rise, but in that case, unemployment will stabilise and perhaps begin to fall. housing market developments and rising equity prices have caused household wealth to rise again. combined with continued handsome growth in disposable incomes and more upbeat consumer expectations, this means that we take a more positive view on the outlook for private consumption. the decline in consumption during the crisis has been sharper in denmark than in most other countries. despite a fairly good rise in incomes. the consumption ratio has thus dipped and now stands at a very low level. this, together with general stabilisation of the economic development and the slightly positive sentiment, paves the way for the return of confidence and for households to spend the increase in disposable incomes on consumption and residential investments. however, indications for the first months of the year do not suggest a strong reversal. the low interest rates will gradually stimulate the economy over a number of years. therefore, interest rates will have an underlying expansionary effect on the economy in the years ahead. this also applies to fiscal policy as the expansionary stance

felt required. the ministry of finance provides the secretariat. sub - committees / groups formed among sebi, irda, pfrda and rbi, meet to discuss and sort out issues relating to developments in the financial markets having implications cutting across different regulators. institutionalised and formal approach to decision making in a crisis has the benefit of building on the experience of the members. consultative approach we have also reaped the advantages of using external experts in our policy making. we have a technical advisory committee for monetary policy consisting of academicians, practitioners and experts, which tenders advice to rbi on monetary policy stance. there is also a technical advisory committee that consists of financial sector experts from areas such as banking, academics, government, stock exchanges, credit rating agencies and market representatives. this committee meets once a quarter to deliberate on developments in money, foreign exchange and government - securities markets and offers advice on policies for regulation, growth and further reforms in financial markets, including products, practices and institutional arrangements. capacity building equally crucial is the need to develop people and systems to deal with scenarios and contingencies, which can be achieved only through a sustained process of capacity building. giving exposure through participation in meetings at local and international levels, allowing officers even at fairly junior levels to be part of the dialogue process at the top levels in various co - ordination fora, enormously helps in nurturing talent. a consultative and participative approach to decision making through setting - up of working groups consisting of a mix of internal and external people with clearly set tasks and time - lines not only casts responsibility but also aids developing expertise. emphasis in these groups is on harnessing collective wisdom and balanced judgement, typical of a college - like atmosphere for decision making. robust infrastructure i am referring to the development of sound market infrastructure for payments and settlement for all financial transactions as also market infrastructure for trading reporting information dissemination and clearing settlement. ccps for clearing and settlement of equity government securities forex and money markets are in place following the best practices laid down by iosco / cpss. the infrastructure for electronic payments and rtgs are now taken for granted. summing up a lot has been talked about the current crisis and the response. most of these talks are on the website. i would just like to say that the major learning from this crisis is that globalization has meant that no country is immune from the happenings in global financial markets. also, at one level, the presence of complex and interconnected financial entities across