on which the policymakers concerned are continuing to work. perhaps the broader significance is that the difficulties facing greece, while unusually stark, are a reminder of the challenges facing many governments in europe, and for that matter the united states and britain, over the long haul. ratios of debt to gdp are rising quite significantly in all these cases. there are several reasons. the first is the size of the recessions being experienced, which obviously reduces revenues and adds to some categories of spending – the so - called “ automatic stabilisers ”. this effect is relatively larger in some european countries but it occurs everywhere to some extent. the second factor is the discretionary budgetary decisions aimed at stimulating demand and injecting capital into banks. in the circumstances, the former was understandable ; the latter was unavoidable. the “ automatic stabilisers ” will presumably “ automatically ” move budget positions in the right direction as economies recover. the costs of stimulus and bank rescue measures, while one - off in nature, do leave debt permanently higher. but without such measures, economies might have suffered much deeper downturns and so the extent of budget deterioration could have been much greater, itself leaving an even bigger debt legacy. if that was the end of the story, we would not want to get too worked - up over debt ratios. unfortunately, though, there is more to the story. for several important countries there was a trend increase in debt - to - gdp ratios going on before the crisis occurred. for the domestic audience, let me be clear that australia has been a conspicuous exception. particularly in mainland europe, the pattern has tended to be for debt ratios to rise quickly in periods of recession, then to stabilise for some years, before rising again in the next recession. no doubt multiple factors are at work but the interaction of changing demographics and generous welfare, health and retirement systems is prominent. the same factors also work, other things equal, to lessen future potential economic growth. it is certainly not unprecedented for countries to have debt stocks much larger than their annual gdps. this has usually been seen when they faced the requirements of fighting wars. those ratios subsequently came down over time. but the situation now is different. the decline in debt ratios seen after the second world war, for example, driven by rapid growth in output as population expanded and productivity surged, will not easily be repeated in many of the major countries. it is these more deep - seated trends, which were in place

malcolm edey : the card payments review speech by mr malcolm edey, assistant governor ( financial system ) of the reserve bank of australia, at the cards & payments australia conference, melbourne, 12 may 2016. * * * thank you once again for the opportunity to address this event. in some ways this is an awkward time to be giving a speech on card payments. as you know, the reserve bank payments system board has been conducting a comprehensive review of its regulation in this area. that review is now nearing completion. it is expected to be finalised at the board ’ s next meeting, which will take place next week. obviously i can ’ t pre - empt any decisions that might come out of that meeting. instead what i would like to do is offer a kind of curtain - raiser, by summarising the history of the review and the way it has unfolded to date. i plan to do that under three headings : the background, the issues and the process. the background let me begin with some brief background. the current arrangements for payments system regulation date back to the wallis reforms that were enacted in 1998. those reforms : • established a separate payments system board of the reserve bank with a majority of independent directors, • gave the board the power to designate payment systems, and to set regulatory standards for designated systems in relation to such matters as access and pricing, • set the policy objectives of the board as efficiency, competition and stability. the wallis report recommended an initial focus on credit cards, and accordingly this was the first area of regulatory action taken by the new board. the four - party credit card schemes were designated in 2001 and, after a period of consultation, a package of reforms was implemented from 2003 onwards. the key elements of that package are well known and are still in place. they included : • a weighted average cap on interchange fees of 50 basis points • an access regime for credit card schemes, and • removal of no - surcharge rules imposed by the schemes. subsequently a package of reforms for debit cards was introduced in 2006. the thinking behind these regulatory measures was heavily focused on the efficiency of price signals to consumers. interchange fees and surcharging rules were at the heart of this, and it is not surprising that they remain central to the current review. the board ’ s early work recognised that interchange fees play an important role in influencing the incentives to use particular payment instruments. in commercial terms, interchange fees serve the purpose of rebala