clearer. european experience shows that the best contribution monetary policy can make to balanced growth and development in the longer term is to safeguard price stability. price stability provides a fixed framework for the long - term strategies of both business enterprises and consumers. in practice, price stability means very low inflation in the range of 2 per cent. for this reason, the maastricht treaty makes price stability a direct objective of the european central bank. the same applies to a number of central banks in non - european countries as well as the uk, sweden and norway. the fact that the central bank ’ s objective is price stability does not prevent short - term aspects of the significance of the interest rate to employment from being taken into account, but only in situations where this does not conflict with the objective of price stability. as will be known, danish monetary policy is related closely to that of the euro area. in a more indirect way, our objective is also price stability, since in order to maintain a stable exchange rate our inflation must not deviate significantly from inflation in the euro area. since world war ii, denmark has pursued a fixed - exchange - rate policy in various guises, with varying degrees of firmness. denmark reaped favourable experience from its consistent fixed - exchange - rate policy in the 1980s and 1990s. in fact, denmark is a good example of how for a number of years it has been possible to reconcile high employment, rising real wages, low inflation and a favourable balance of payments with the help of an economic policy based predominantly on structural changes, and not on short - term cyclical policies. as a consequence, when the euro was introduced, denmark decided to continue its fixed - exchangerate policy with a narrow linking of the krone to the euro. the official danish interest rate is therefore earmarked to influence the exchange - rate development. fortunately, denmark ’ s economy has proved to be so robust in recent years that confidence in the krone ’ s stability has increased significantly. the foreign - exchange market is thus currently extremely stable. formerly, the mortgage - credit market was dominated completely by fixed - rate loans. once a loan had been raised, private home owners were not affected by increasing interest rates. so when a home changed hands, the focus was on the mortgage payments for the first year. an alternative from the end of the 1990s has been adjustable - rate mortgage loans. since then, this area has been subject to extensive product development and marketing. it is very positive to note

glenn stevens : recent economic and financial developments in australia opening statement by mr glenn stevens, governor of the reserve bank of australia, to the house of representatives standing committee on economics, finance and public administration, perth, 21 february 2007. * * * mr chairman, members of the committee. my colleagues and i welcome the opportunity to appear before you today. i have attended most of these hearings since they started in their current form in may 1997, and have observed over that decade the way they have become a very important part of the monetary policy framework in australia. i am sure that their importance will continue to grow in the years ahead, and i look forward to taking part in them. it is fitting that this hearing take place in western australia, where the effects of some of the profound international forces affecting the economy are perhaps clearest. i refer of course to the rise in the relative price of natural resources, which has increased shareholders ’ and employees ’ incomes in the resource sector, increased the flow of labour and capital into that sector, and had a flow - on effect on a range of other industries. this has all fostered a generally very expansionary set of conditions in western australia in particular, though the effects have spread around the country. this change in relative prices is welcome, but such events are rarely uniform in their geographical or industry impact, and this one is no exception. in the south - eastern part of the country, where direct exposure to the resources sector is smaller, the positive impact is not as strong. in addition, the other dimension of the change in relative prices to which i refer – the relative decline in prices for many manufactured products as a result of the emergence of china and other low - cost producers – is affecting local producers. not surprisingly, those parts of the economy, while growing, are experiencing less strength than seen here in the west. nonetheless, the rise in australia ’ s terms of trade of over 30 per cent over the past three years, taking them to their highest level for 50 years, is expansionary overall. the real incomes of australians are higher and, other things equal, this adds to demand. for macroeconomic policy, it is a matter of ensuring that the economy adjusts to the change as smoothly as possible. that task is easier today than it once was. a more flexible economic structure, a floating exchange rate and a better macroeconomic policy framework mean that the adjustment is proceeding much more smoothly than it did on some other occasions in history when the terms