higher lending rates seen in countries with prolonged npl problems weigh negatively on credit demand. higher lending costs drive firms to utilise internal sources of financing, resulting, on average, in the avoidance of large investment projects. a reduction in npls has the reverse effect, improving the willingness, incentives and ability of economic agents to invest in new projects. the practical implications of npls for growth opportunities are evident when looking at european data on bank lending to non - financial corporations and households. the contraction of bank lending is particularly pronounced in countries suffering from high levels of npls. at the same time, member states with high npl ratios have also experienced below average gdp growth, consistent with the below - average propensity to invest that npls generate. the opposite picture is found for the member states that exhibit a lower level of npls. therefore, the effective management of npls is of the utmost importance for a country ’ s growth opportunities. banks − benefiting from improved asset quality, profitability and liquidity − will be in a better position to reduce the cost of credit risk and lending spreads. this amounts to a pivotal development for the competitiveness of the non - financial corporate sector in an international environment of ultra - low interest rates. it also facilitates the reduction in the debt servicing costs of households that mitigate the impact of reduced household gross disposable income. the above is to the benefit of the real economy as the unlocking of funding and the improved business climate impacts positively on the setting - up of new businesses, investment, employment and growth. in sum, we would move to a virtuous circle where improved asset quality positively affects gdp growth, in turn leading to a further reduction of npls and so on. in conclusion, greece is poised to return to economic and financial normality and to shift to a new, outward - looking and sustainable growth model, based on tradable goods and services. the economic adjustment and structural improvements over the past years have opened up significant investment opportunities. to reap the benefit of these opportunities though, there are certain preconditions : first, the completion of the second review with no further delay ; second, the consistent and determined implementation of the programme in conjunction ; third, a more realistic approach by all parties to the fiscal mix and government debt burden. such developments, together with the cleaning - up of banks ’ balance sheets will set in motion a virtuous circle, paving the way to the full return of the

as the governor, am charged with managing the bank and i am also the accountable authority under the public governance, performance and accountability act 2013. as you know, there is great deal of public 1 / 3 bis - central bankers'speeches visibility of, and commentary about, our monetary policy decisions, but there is much less oversight of how i discharge my responsibilities to manage the rba. from a number of perspectives, current oversight arrangements fall short of contemporary standards. the proposed changes would address this and help the governor manage the bank and its many functions. the recommended changes could also strengthen the monetary policy process, by having a board whose sole focus is monetary policy. i very much welcome the conclusion that this board should include people with diverse perspectives and knowledge and who have experience in decision - making under uncertainty. it is also pleasing to see that the panel recommended that the treasury secretary remain on the board. the establishment of these two boards will require changes to the reserve bank act, which is a matter for the australian government and parliament. you would have already heard that the treasurer intends to proceed with these changes. we will work constructively with the government and parliament with the aim of ensuring that any changes to legislation are effective in achieving their objectives. the review also recommends that the statement on the conduct of monetary policy be updated. this is important because this statement sets out the common understanding between the government and the rba on monetary policy. the review sets out a number of issues that could be covered in this statement – the suggestions make sense and have our support. the board will work constructively with the treasurer to finalise a new statement. the review includes a number of recommendations for how the board works, including the frequency of meetings and the approach to communication. it recommends that the board receive and consider a richer set of briefing materials, including on economic modelling, research and monetary policy strategy. it also recommends closer interactions between board members and the bank's staff in the expectation that this will support a stronger culture of challenge and debate within the rba. the board will consider these issues over coming meetings. it will develop a holistic response, given that many of the recommendations in this area are interrelated and will have flow - on effects for how we do our work and how parts of the bank are structured. we will publish a detailed response later this year after the necessary work has been completed. the review also includes a number of recommendations to strengthen the rba's management, culture and operations.