risks to eu systemic stability. to that end, a closer link between the financial stability assessment of central banks and the supervision of major cross - border banking groups undertaken by the colleges of supervisors would be helpful. it is also important to ensure an effective coordination of policy actions between central banks and supervisory authorities in case a systemic threat is identified. against this background, the eurosystem strongly supports the ecofin conclusions adopted in october 2007, whereby the council invites the commission to assess possible clarifications in the legal framework for the exchange of information between supervisors and central banks. fourth, in order to ensure effective crisis management and resolution at the eu level, it is crucial that all responsible authorities maintain a high degree of preparedness to handle the complexity of a cross - border crisis situation, while preserving the necessary flexibility of action. every crisis situation is unique and the arrangements for crisis management and resolution cannot anticipate the full range of causes, propagation channels and outcomes of financial disturbances. moreover, setting out ex - ante detailed arrangements on how to deal with and resolve crises can unduly constrain the flexibility of action of supervisors, central banks and also treasuries in a stress situation. instead, the emphasis should be on enhancing preparedness. this may be achieved, among other things, through stress - testing exercises aiming at verifying the resilience of the financial system under stress conditions and through financial crisis simulation exercises aiming at assessing the effectiveness of existing arrangements. in this respect, the periodic conduct of simulation exercises at the eu level is a positive aspect. also the eurosystem devotes particular efforts to this area. it has conducted already two simulations which tested the effectiveness of its own arrangements and plans to conduct others in the future. finally, i should emphasise that the eu arrangements should also take into account the global dimension of financial stability. i do not need to dwell much on this aspect, since the financial market turbulence provides a vivid reminder of how a disturbance in a particular market segment can propagate across many markets and countries. this entails that the eu arrangements should also include mechanisms which support the co - operation between authorities from the eu and from third - countries in addressing common concerns. in this respect central banks can claim a long - standing tradition of effective co - operation on a global basis. this has been illustrated recently by the joint initiatives of various central banks to address tensions in the money market. 4. conclusions let me conclude with the possible lessons from the present significant

many more households have focused on paying down their debts, rather than borrowing more, and the saving rate has increased. in the earlier period, the level of interest rates that we have today would have caused a large boom in borrowing, but this has not occurred. one area where this change in behaviour is apparent is in the household sector ’ s injection of equity into the housing stock ( graph 10 ). in the early 2000s when property prices were increasing strongly, many households used their newfound wealth to withdraw equity and enjoy higher levels of consumption. again, this is not occurring on this occasion and this is changing the way that monetary policy affects the economy. a related part of the transmission mechanism that may be changing is the so - called cashflow channel. one of the ways that lower interest rates help boost spending is by improving the overall cash flow of the household sector. since household borrowing exceeds household deposits, a cut in interest rates puts more money in the aggregate household budget. however, there are large differences across households. when interest rates go down borrowers pay less interest and so are better off. but savers receive less interest income and so are worse off. how these two different groups respond determines how powerful this cash - flow channel is. while it is not possible to be definitive, there are reasonable grounds to believe that the behaviour of both borrowers and savers might have changed a little. many borrowers have responded to the lower interest rates of recent years by paying off their loan a little faster, rather than increasing their spending. this is evident in the data on total mortgage repayments and scheduled repayments ( graph 11 ). conversely, it seems likely that those relying on interest income have reduced their spending by more than would previously have been the case. certainly, the many letters we have been receiving at the bank recently would suggest this. unfortunately, one of the consequences of a world in which many more people want to save than to invest is that the return to saving falls, particularly on savings held in low - risk assets such as bank deposits. one other change to the global monetary transmission mechanism that has echoes in australia is the behaviour of wages. as in many other countries, wage growth in australia has been quite subdued and lower than would be suggested by most of our standard models. the latest reading of the wage price index shows an annual increase of 2½ per cent and the earnings per hour measure from the national accounts is lower still ( graph 12 ). this low level of wage growth is contributing