suspension of the normal timetable of the deliberative processes of our board. with that said, let me now return to the main body of my speech. sometimes it requires an effort to find the complimentary remarks that usually preface a lecture such as this. but not so in the case of giblin. while he is remembered principally as an economist, he did not take up this calling on a full - time basis until he was 47 years old, by which time he had already done so much in other areas. after graduating from cambridge, during which time he played rugby for england, he spent some time prospecting for gold in canada, became a merchant seaman, a plantation manager in the solomon islands, an orchardist in tasmania, a member of the tasmanian parliament, and was decorated for bravery in world war i. as an economist, he made contributions in a number of areas and had a close association with central banking through his membership of the board of the commonwealth bank. but it is another aspect of this extraordinarily gifted man that i would like to commemorate tonight – his willingness to communicate difficult economic ideas to the broader public. giblin wrote a series of articles in 1930 called letters to john smith in which he set out the economic issues facing australia at the start of the depression. this series faced economic issues head on, but did not talk down to its readers. i will try to follow his example this evening. what i intend to do is to answer three questions that are sometimes put to me by members of the public, rather than by regular participants in monetary policy debates. because the questions are from “ lay ” people, they may appear naive to a professional audience, but i often find that blunt untutored questions are the hardest to answer, and they can often force a re - examination of previously unquestioned assumptions. they see copland ( 1960 ). ibid. can also open up some interesting historical and academic issues. i should also add that my choice of topic tonight is not prompted by any current economic events, but is the outcome of some reflections going back a decade or two. the three questions are the following : 1. why does the reserve bank have to change interest rates at all : why can ’ t they be left constant? 2. why does the reserve bank have to be involved in the first place : why can ’ t the determination of interest rates be left to the market? 3. why do we need to set our own interest

central bank to manage liquidity and provide last - resort funding in a crisis. banking systems tied to a commodity standard were simply not flexible enough to cope with periodic bank runs and liquidity crises. no doubt, the true believers in free banking would argue that the theory was never properly tried, and that, if it were, the market would find a solution to the apparent problems. but that is to make the theory unassailable by pure assumption. the other school of thought on free banking is an even more radical one. it proposes a system of competing private currencies that would not have to be linked to any standard of value. the banks operating in such a system would compete with one another to offer sound currencies on terms that who would like to introduce money base targeting, see macfarlane ( 1984 and 1989 ) and goodhart ( 1995 ) for the contrary view. another interpretation of what " leaving it to the market " could mean is that the reserve bank should move the cash rate to where the market expects it to be. this could mean, for example, moving the cash rate to where the 90 - day rate currently is. the problem with this approach is that the current level of the 90 - day rate is mainly a reflection of where the market expects the reserve bank to set the cash rate 90 days hence. the process then becomes completely circular. see pope ( 1989 ) for a discussion of " free banking " in australia prior to 1910. the more commonly cited case of free banking is in the 18th century scottish banking system ( see white, 1984 ). note, however, that other writers such as goodhart express scepticism that this was a true case of " free banking ". the best known proponent of this view is hayek ( 1976 ). were attractive to the public. in effect, a country operating such a system would depend upon competition between commercial banks to ensure stability in the financial system and low inflation. to my mind, these free - banking proposals really belong in the world of technical curiosities. they can be argued to work in theory, but the fact is that there is no working example of such a system anywhere in the modern world. so i have to conclude that those who say interest rates should be left to the market are proposing something that is either not workable ( if they mean simply shutting down central bank operations ) or something that is much more radical than most people would be prepared to accept. this brings me to my third