has been fostered by low interest rates and the depreciation of the exchange rate since 2013. growth of non - mining economic activity is expected to be around average over the next two years. one notable aspect of our latest forecasts was the upward revision to the outlook for australia ’ s terms of trade. prices of bulk commodities have risen this year and contributed to a rise in the terms of trade of about 6 per cent in the june and september quarters. that ’ s the first rise in the terms of trade in some time. our forecasts are for the terms of trade to remain above the low point reached earlier this year ( and about 25 per cent above the average of the early 2000s before the boom ). while our forecasts are uncertain and subject to various risks, the upward revision represents a marked change from the pattern of the past five years. our assessment, based in part on liaison information, is that the improved outlook for commodity prices is not likely to lead to a noticeable pick - up in mining investment ( in the near term at least ). even so, if our forecasts are right, the terms of trade will shift from the substantial headwind of recent years to a slight tail breeze providing some support to the growth of nominal demand. 1 having set the scene on the national economy, i now want to switch attention to the differences across the states. outcomes across the country have varied in large part because the effects of the end of the resources boom are quite different across industries. the economies of the 2 / 14 bis central bankers'speeches mining states – western australia and queensland – have been most directly affected by the sizeable declines in mining investment and commodity prices over recent years. mining investment is relatively intensive in its use of labour. putting the mining infrastructure in place drew upon workers with a range of construction and engineering skills. it also employed people with skills that we wouldn ’ t normally associate with mining, in industries such as business services, transport and manufacturing. many of those people didn ’ t work on site, but were based in other parts of the state ( and in some cases, beyond that ). 2 whether or not they were on - or off - site, people were well rewarded for their work on mining - related projects. in response to those opportunities, there was a large rise in population growth in the mining states. much of the spending undertaken by the new and highly paid workers found its way into the local economies, further boosting economic activity. however, mining

paul tucker : shadow banking – thoughts for a possible policy agenda speech by mr paul tucker, deputy governor for financial stability at the bank of england, at the european commission high level conference, brussels, 27 april 2012. * * * it is excellent that the eu commission has published a consultative paper on shadow banking and is holding this conference today. the commission ’ s paper fits well with the approach that the g20 financial stability board is taking. the issues here are very important since, as the international community reregulates the banking industry, more activity is almost bound to be booked outside banking. we need at some point to move on to policy. i am therefore going to use today ’ s occasion to put on the table some thoughts for a possible concrete policy agenda. i am doing so in the spirit of wanting to help nudge this work into its next stage. and i should be clear that the fsb, where our work is led by adair turner, have not yet articulated our collective preferred policy approach. the definition of “ shadow banking ” employed by the fsb and the eu commission is, paraphrasing, credit intermediation, involving leverage and maturity transformation, that occurs outside or partly outside the banking system. 1 that is very close to the definition i used in a speech two years ago calling for work on shadow banking, except that in addition to leverage and maturity transformation i include “ monetary services ”. 2 i want to make three broad points about this. first, it is very clear that “ shadow banking ” is not the same as the non - bank financial sector. this is not a debate about the appropriate regulatory framework for the whole of finance. for example, the vast majority of hedge funds are not shadow banks, and don ’ t trade in the credit markets or especially illiquid markets. second, non - bank intermediation of credit is not a bad thing in itself. indeed, it can be a very good thing, helping to make financial services more efficient and effective and the system as a whole more resilient. we must remember that as we make policy. but, as we know from this crisis and from previous ones, true shadow banking can weaken the system. regulatory arbitrage, which is always with us, can distort and disguise channels of intermediation. that leads me to my third general point. shadow banking comes in lots of shapes and colours. there are degrees to which any particular instance of shadow banking replicates