national script about recessions and recoveries, financial behaviour and policy frameworks. recessions will occur, as they always have. financial behaviour matters greatly and can, if we are not careful, contribute to instability. in our thinking about the future, we all need to remember that. but if we do, and act with due prudence during the upswings, recessions need not be bad ones and, when they come, we can recover. signposts to that effect ought to be erected along the road to prosperity. applying the lessons the task before us now is to manage a new expansion. of course, we are still in that period when we cannot be absolutely certain that the expansion will gain full momentum. every upswing starts with that uncertainty. the conduct of macroeconomic policies in the near term must grapple with that uncertainty, as it always must do. even so, it is not too early to think about issues of a medium - term nature. the key question is : having had a fairly shallow downturn, how do we make the upswing long and stable, and relatively free of serious imbalances? at least part of the answer is that we will need to re - invest in the same policy discipline, and the same careful private - sector management, that paid dividends in the recent episode. that means keeping tested frameworks in place, amended as necessary in the light of experience. it means unwinding temporary measures as appropriate. it means keeping a focus on flexibility. and perhaps most of all, it means resisting the temptation to assume prosperity is easily achieved, or easily managed. in that spirit, let me offer three observations. first, we start this upswing with less spare capacity than some previous ones. after a big recession, it usually takes some years for well - above - trend growth in demand to use up the spare capacity created by the recession. this time that process will not take as long. most measures of capacity utilisation, unemployment and underemployment are much more like what we saw after the slowdown in 2001, than what we saw after the recession in the early 1990s. this is not a problem. in fact, it is good. it is a goal of macroeconomic policy to try to keep the economy not too far from full employment. and some spare capacity does exist, and will do so for a little while, which is why we think underlying inflation will probably come down a little more in the period ahead

in the public interest and, if so, to ensure they go ahead. industry - level decision making may be only part of the answer. along with these questions of governance, the critical decisions of the review are likely to relate to the architecture of the payments system. by that i mean in particular the question of whether there is a place for additional centralised architecture in the australian payments system. a possible argument for that proposition is that centralised systems may be better able to innovate than bilateral systems. they may also be structurally more efficient when a network has a large number of participants, and better suited to providing open access to new players. the possible need for a centralised architecture is also relevant to the question of faster ( or real - time ) payments at the retail level. the consultation process has brought out a range of views on this subject. some argued that the existing architecture provided a sufficient level of centralisation, or pointed to the potential cost of moving existing systems onto a hub. others focused on the potential for some form of hub to provide real - time retail transfers and went as far as proposing a governance framework for such a system. we should be in a position to announce some conclusion on that in the near future, along with the other matters i ’ ve outlined today. let me turn briefly to the third and fourth areas of current policy work. issue number three is the regulatory framework for the eftpos system. one of the very significant developments in recent times has been the establishment of epal as a national scheme for eftpos payments. the reserve bank has welcomed that development because we see it as strengthening competition among card payment schemes in the domestic market. as a consequence of the establishment of epal, the eftpos system now works largely as a multilateral network. but much of the existing framework – the access regime and interchange fee standards – was designed in reference to the earlier bilaterally - based system. as a result, the relevance and applicability of the existing framework will need to be reviewed. one change that has already been made was the decision in november 2009 to bring multilateral eftpos fees under the same interchange fee standard as applies to scheme debit cards. but further changes to all elements of the regulatory framework for the eftpos system will need to be considered. some of the reasons for that are purely technical, because the regulations as they stand do not reflect the system ’ s current structure. but there are also