authorities themselves to manage the boundaries between their responsibilities and identify the necessary forms of coordination and information sharing. i have described the steps already taken in this respect and the initiatives under way. apart from any technical improvements required, this model appears to be decidedly preferable to the creation of complex and rigid entities. it makes it possible to perform coordination more efficiently, to adapt the latter ’ s forms and content to the evolution of the market with the necessary rapidity, and not to impinge on the authorities technical independence. the introduction into the banking industry of the system for legislating and providing supervisory coordination and cooperation known as the lamfalussy system, 19 with the creation of the european banking committee and the committee of european banking supervisors, has eroded the scope for autonomous regulation by the member states and shifted both legislative choices and the process of establishing uniform supervisory practices to community level. there thus appears to be a decline in the importance of the interministerial committee for credit and savings, whose function of providing legislative guidelines has shrunk considerably as a consequence of the integration of european financial regulation, not infrequently by way of maximum harmonization solutions, in both primary and secondary legislation. articles 9 and 10 of law 262 / 2005. commission decisions of 5 november 2003, 2004 / 5 / ec and 2004 / 10 / ec. on the other hand new coordination needs are emerging that involve the political as well as the technical sphere and make it desirable to find ways of linking up the ministry for the economy and finance and the supervisory authorities. these needs primarily concern the prevention and management of financial crises with potentially systemic effects. the problem has not only a national but also a european dimension. the necessity of tackling it was referred to in the proposals put forward by the eu economic and financial committee in march 2006 on the basis of the indications expressed by the informal scheveningen ecofin meeting. the minister for the economy and finance also mentioned this point when he reported to parliament on the ministry ’ s policy guidelines. these matters need to be studied, including by reference to the best solutions adopted in other legal systems and the experience being gained with crisis simulations coordinated at european level. it is necessary to find forms and methods of coordination that distinguish properly between the responsibilities of the regulatory and political authorities. the former include the identification, on the basis of technical evaluations, of a state of crisis. on the other hand, the management of crises that have been declared, when they are of a systemic

one could expect that the chinese authorities will have both the will and the capacity to respond, the more so now that inflation has moderated. china will have cycles like other economies, but it seems likely that the chinese economy will grow pretty strongly on average for a while yet. it will be a very large economy. even at the new growth target of 7½ per cent, a lower target than in the past five years ( all of which were, of course, exceeded ), chinese gdp will equal that of the united states, in purchasing power parity terms, in about a decade. it will exceed that of the euro area within the next few years. there are issues of rebalancing the sources of growth in asia, to which i shall return shortly. but the main point for now is that the global economy is faced at present with a year of subtrend growth in 2012, according to international forecasters. this is a subdued but not disastrous outcome. and asia in particular is well - placed to do fairly well, given sensible policies. downside risks certainly do remain, and are easier at this point to imagine than upside ones. at this point though they remain risks, rather than outcomes. what then about australia? at the moment, the viewpoints of those inside australia differ somewhat from those of people outside australia. viewed from abroad, judging by what people say, observers see an economy that experienced only a relatively mild downturn in 2008 – 2009, that made up the decline in output within a few months, and that has continued to expand, albeit at only moderate pace, since then. they see an economy that has not experienced a significant recession for 20 years, that has strong banks and little government debt – and that debt remains aaa - rated. some observers worry about high levels of housing prices and household debt. this is understandable given the problems that have occurred in some other countries. but then others point out that the arrears rate on mortgages, at 60 basis points, is quite low, and that the rate of new construction of dwellings in recent years has been low relative to population needs. bis central bankers ’ speeches foreign investors see a country that remains quite open to them, and that, reflecting its economic circumstances, offers rates of return that are high by international standards, even though they are low by australian historical standards. they understand the potential returns on the mineral and energy wealth stored in or around the australian continent, and that our terms of trade have over