trade invoiced in rmb. the financial infrastructure that supports this trading is gradually being put in place. and some of the stumbling blocks and misperceptions are being eroded. there is, though, much further to travel on this journey. currently, less than 1 per cent of australia ’ s merchandise trade with china is invoiced in rmb. for china, around 12 per cent of total merchandise trade in 2013 was invoiced in rmb, although we estimate the number was around 3 to 5 per cent if trade with hong kong is excluded. these figures suggest that there remains significant potential for growth in rmb trade invoicing, not only by australian firms, but by firms in other countries as well. australia ’ s own experience with liberalisation is that the growth of trade makes financial liberalisation easier. as financial markets develop to support trade relationships, those same markets can, in time, support deeper financial relationships. trade helps deepen financial markets, and deeper financial markets make it easier to liberalise. in the end, though, how lowe p ( 2014 ), “ some implications of the internationalisation of the renminbi ”, opening remarks to the centre for international finance and regulation conference on the internationalisation of the renminbi, sydney, 26 march. bis central bankers ’ speeches long this whole journey takes in china is largely dependent upon the pace of reform by the chinese authorities. it is, of course, also dependent upon the speed with which the financial sector is able to respond to any new opportunities. in part, the development of the appropriate markets depends on commercial decisions made by financial institutions. the reserve bank is seeking to play a positive role in this area, partly through helping create a constructive environment in which these decisions can be made. given this, i would like to spend a few minutes outlining the various elements of our work in this area. first, we have sought simply to better understand how the rmb markets operate. in particular we have sought to understand : the nature of the existing arrangements and products ; any impediments to the development of an rmb market in australia ; and how the rmb market sits within the broader financial system. our representative office in beijing has been helpful here as have the frequent trips by rba staff to china. we have also worked closely with the financial sector in australia, including with the rmb working group and have been involved in two separate surveys of corporates ’ attitudes toward the

##nt and have built in larger buffers for interest rate increases. much of the debt is held by high - income households that have the ability to service their debt and many borrowers are already making repayments well above what is required. furthermore, those on very low fixed - rate loans have some time to prepare themselves for higher interest rates. while in aggregate it seems unlikely that there will be substantial financial stability risks arising from the household sector, risks are a little elevated. some households will find interest rate rises impacting their debt servicing burden and cash flow. while the current strong growth in employment means that people will have jobs to service their mortgages, the way the risks play out will be influenced by the future path of employment growth. this, along with the board's assessment of the outlook for inflation, will be important considerations in deciding the size and timing of future interest rate increases. thank you and i look forward to your questions. endnotes [ * ] i am grateful to amelia gao, marcus robinson and michelle wright for excellent assistance with this speech. household credit is a subset of total household debt. it excludes debt of unincorporated enterprises and hecs debt. kearns j, m major and d norman ( 2020 ), ‘ how risky is australian household debt? ’, rba research discussion paper no 2021 - 05. see wang l ( 2022 ), ‘ household liquidity buffers and financial stress ’, rba bulletin, june. see bergmann m ( 2020 ), ‘ the determinants of mortgage defaults in australia – evidence for the double - trigger hypothesis ’, rba research discussion paper no 2020 - 03. alfonzetti m ( 2022 ), ‘ are first home buyer loans more risky? ’, rba bulletin, march. see rba ( 2022 ), ‘ box b : how risky is high - dti and high - lvr lending? ’, financial stability review, april.