lot of the work needed to keep inflation on a reasonable track was done in the period from 2002 to 2005, when unusually low interest rates, which had been appropriate for the earlier part of the decade, were gradually lifted towards normal. they were raised a bit further, to be slightly higher than normal, during 2006. without that sequence, we would today have been in a much less comfortable position. whether or not further instalments in that sequence will be needed is a question the board will continue to address over the months ahead. the board ’ s judgement will, as usual, be informed by all the relevant data and an assessment of the risks we face over the coming couple of years. conclusion we are living though a period of profound change in the world economy, which is offering a rare chance to improve further the economic success australians have enjoyed over the past decade and a half. historically, australia often did not manage periods of prosperity very well, as our institutional and policy structures were not sufficiently flexible and long - term in their orientation. the chances of success are much higher on this occasion, and the evidence so far is that we are doing much better, but the situation is not without risks. i trust that on some future visit to queensland we will be able to look back and find that the risks had been effectively managed. if so, then monetary policy will have played its part in furthering the prosperity and welfare of the australian people.

banks of the group of ten countries, bank for international settlements, 2001. in sweden, as in most other countries, the principle for all securities trading ( shares, interestbearing papers and derivatives ) settled in vpc, is delivery versus payment ( dvp ). this eliminates credit risk. the remaining counterparty risk is known as replacement cost risk – the risk of having to pay more for a transaction that replaces a failed trade. this risk is normally just a fraction of the credit risk but can be sizeable when prices are volatile. in sweden, transactions in shares and interest - bearing securities are normally settled within three days after the trade. the replacement cost risk for such business largely depends on the state of the market. when market rates are notably volatile, failure to deliver can result in substantial replacement costs. the introduction of a central counterparty service next year will make it possible to manage the counterparty risks in share trading on the swedish market. moreover, it is now possible to trade swedish shares on the new european trading facilities that are linked to central counterparty clearance. this points to a future reduction of the counterparty risks in swedish share transactions. the counterparty risks in the derivatives market are considerably larger and harder to manage than they are in the spot market. this is because the duration of risk exposures is longer in the derivatives market, often as much as several months. the swedish derivatives market already provides the possibility of managing counterparty risks by means of a central counterparty. turning now to market transparency, what is the situation in sweden? mifid entails the introduction of rules for transparency before and after share trading. the requirement applies to all trading facilities and involves the publication of prices and volumes. so for shares there are no deficiencies concerning transparency in these respects. there may, however, be shortcomings in over - the - counter trading in interest - bearing securities and derivatives. a large proportion of fixed - income trading in sweden is done by telephone rather than on a market. derivative instruments can also be traded off - market. 8 if trading is arranged instead with an electronic facility, each order is matched against the best price and market access can be improved for new players. still, there may be financial markets whose functioning is not improved by increased transparency. it should therefore be up to each market, including the swedish fixed - income market, to decide which approach is most effective. what are the lessons from this argument? well, in times like these, coloured