be ‘ unquestionably strong '. standards covering financial market infrastructure were also strengthened and supervisory oversight increased. central counterparties ( ccps ) and securities settlement facilities generally performed well through the gfc. ccps in particular withstood the default of lehman brothers, although the complete resolution was complicated and took some time. this resulted in increasing regulatory pressure for securities and derivatives to be cleared through ccps, making them even more systemically important. regulatory oversight increased along with this increase in importance, with attention focused on risk management and loss absorbance capability of ccps, recovery plans and resolution in the event that the ccp was unable to recover. international work in this area is ongoing, with the fsb releasing a consultation paper on ccp resolution in february. as overseer of the stability of central counterparties in australia, the reserve bank has been applying these new standards to domestically operating ccps, the most prominent ones being the asx ccps for equities and derivatives. finally, there seems to be more willingness for regulators and policymakers to take action if they see risks building. prior to the gfc there was a school of thought that because asset price bubbles could not be detected in advance, it was better to clean up after any bust, rather than lean against the cycle with policy. this was not the only view, however, and some policymakers had argued for a number of years that there were indicators that could be used to detect financial imbalances and that in some circumstances policy settings should take these imbalances into account. 1 post - gfc, there has been some swing to this latter view. there is now more acceptance of the need to take action when system - wide risks are rising. this is reflected in the increasing use of what are commonly known as macroprudential policies. as my colleagues david orsmond and fiona price note in a bulletin article in december 2016, there is no universally accepted definition of macroprudential policy. 2 they define it as ‘ the use of prudential actions to contain risks that, if realised, could have widespread implications for the financial system as a whole as well as the real economy. ’ they also note that the use of such tools has increased in a number of countries post - gfc. 3 / 4 bis central bankers'speeches in australia, we see macroprudential policy as part and parcel of the financial stability framework. as we have set out on other occasions, the essence of

activity. residential property sales have declined sharply over the past year, and housing starts have also fallen to be lower than they have been for over a decade. property developers are in stress and many are finding it difficult to finance the construction of apartments they have committed to. the government is encouraging banks to lend and is providing some direct support but, at the same time, it has been encouraging developers to reduce their indebtedness. this weakness in the property sector has implications for steel demand and hence demand for our iron ore. the second area of substantial uncertainty is what the current high inflation and cost - of - living pressures might do to price and wage expectations in australia. every day in the news we hear about how price rises are hurting households. first it was rises in the prices of goods during the pandemic as supply chains couldn ’ t cope with the surge in demand. but increasingly price rises in non - discretionary goods are impacting household budgets. petrol, then groceries, now rent and electricity. the floods have resulted in volatility in fresh food prices. furthermore, high fuel and shipping costs are finding their way into prices as businesses pass on increases in their input costs. how households and businesses respond to these pressures is going to be critical for the australian economy and the path of monetary policy. households recognise that their real wages are declining. and with the labour market as tight as it is, it is quite possible that workers will demand and may get wage rises. businesses might well be willing to pay higher wages if they think they can easily pass on the cost increase in higher prices. how this inflation psychology plays out is critical for the inflation outlook and for monetary policy. if this mindset were to take hold inflation will remain high. a third uncertainty is the behaviour of households as interest rates and inflation rise. although household debt hasn ’ t risen much over the past decade relative to income, it is still high so rising interest rates could make servicing debt much harder. on the other hand, one of the legacies of the pandemic was a large build - up in household savings buffers. with fiscal support for incomes during the pandemic, low interest rates increased the cash flow of households with mortgages and at times limited opportunities to spend and savings increased markedly over the past couple of years. we estimate that households overall accumulated more than $ 250 billion in additional savings during the pandemic. most of this saving has been among households at the upper end of the income distribution