and investors need to evaluate developments in the broader market, including how their investments might turn out in less benign scenarios. careful attention to these issues will help ensure that in getting the economic benefits of low interest rates we do not generate unacceptable risks on the financial side. concluding remarks let me conclude by trying to tie these various strands together. very low global interest rates have been with us for some time. and it is likely that they will stay with us for some time yet. fundamentally, this reflects the low appetite for real investment relative to the appetite for saving. these low rates are encouraging investors to buy existing assets as they seek alternatives to bank deposits earning very low or zero rates. asset prices have increased in response. some of this is, of course, desirable and, indeed, intended. but the longer it runs on without a pickup in the appetite for real investment, the greater is the potential for new risks to develop. during this period, while we wait for the investment environment to improve, we need to be bis central bankers ’ speeches cognisant of potential risks of asset prices running too far ahead of real activity. this is true in australia, as it is elsewhere around the world. the underlying solution is for an improvement in the investment climate. monetary policy can, and is, playing an important role here. but ultimately, monetary policy cannot drive the higher ongoing expected returns on capital that are required for sustained economic growth and for reasonable long - term returns to savers. it is instead government policy – including in some countries, increased spending on infrastructure – that has perhaps the more important role to play here. thank you very much for listening this evening. bis central bankers ’ speeches

central banks have become very large managers of assets themselves. while it is easy to lose track of time, global monetary affairs have been in this very unusual territory for quite some time. it is now six years since the financial crisis was at its peak. even with the knowledge that the recovery from financial crises can be frustratingly slow, few observers predicted that the crisis would throw such a long and enduring shadow over monetary and financial conditions in so many countries. this shadow has created a difficult environment for savers and those managing savings. perhaps at the risk of over - simplifying things, they have three basic choices : 1. they can leave the savings in the bank and earn zero ( or less ). 2. they can use the savings to purchase existing assets from other investors in the hope of earning a positive return. bis central bankers ’ speeches 3. they can use the savings to finance the development and creation of new assets, for example a new piece of capital equipment, a new building or some new intellectual property. it is this third use of savings that is critical to the resumption of strong growth in the global economy. when the crisis hit in 2008, the first of these three savings choices dominated. investors were intent on preserving their capital and remaining as liquid as possible. many sold their more risky existing assets and the prices of these assets declined, in some cases significantly. there was an even more precipitous decline in the demand for new assets, with aggregate investment in many countries dropping to very low levels as a share of gdp. as we gradually climbed out of the crisis, attitudes to investing evolved. faced with very low interest rates on safe assets and evidence that the global economy has been on a recovery track of sorts, investors have been prepared to move out along the risk spectrum and purchase existing assets as they search for yield. in response, the prices of these assets have risen again. this rise in the prices of existing assets is understandable. indeed, it is one of the channels through which stimulatory monetary policy works. low interest rates make it less attractive to hold savings in bank deposits and more attractive to hold other existing assets – and prices respond. the higher asset prices should then both encourage, and make it easier for, firms to increase their investment spending – that is, to use their savings to finance the creation of new assets. it is this latter part of the transmission channel that is proving frustratingly slow in many countries. the strong demand for many existing