policy rates in the major advanced jurisdictions have been near zero for six years now. in fact, official deposit rates in the euro area and some other european countries are now negative. as it turns out, the “ zero lower bound ” wasn ’ t actually at zero. central bank balance sheets in the three large currency areas have expanded by a total of about us $ 5½ trillion since 2007, and the ecb and bank of japan will add, between them, about another us $ 2½ trillion to that over the next couple of years. that central banks have had to take such extraordinary measures speaks both to the severity of the crisis that these countries faced and the limited capacity of other policies to support growth. history tells us that recovering from a financial crisis is an especially long and painful process, and more so if other countries are in the same boat. the direct effect of this unprecedented monetary easing has been to lower whole yield curves to extraordinarily low levels, and that process is continuing. the most pronounced effects can be seen in europe. if one were to invest in german government debt for any duration short of nine years, one would be paying the german government to take one ’ s money. the same can be said for swiss government debt. even some corporate debt in europe has traded at negative yields. it seems likely that these european developments are also affecting long - term interest rates in the united states. these ultra - easy monetary policies have helped along the process of balance sheet repair, bringing households and businesses closer to the point where they can start to spend and hire and invest again. and, it has to be observed, it has made fiscal constraints on governments much less binding than they would otherwise have been. lower interest rates also increase the value of assets that can be used as collateral. banks ’ willingness to supply credit is affected by their balance sheet ’ s strength, of course, but it seems to be improving even in europe at present. for larger businesses with access to capital markets, borrowing terms have probably never been more favourable. such policies are, then, working through the channels available to them to support demand. but these channels are financial in nature. they don ’ t directly create demand in the way that, for example, government fiscal actions do. they work on the incentives for private savers, borrowers and investors to alter their financial behaviour and, it is hoped in time, their spending behaviour. a striking feature of the global economy, according to world bank and oecd

facts regarding the npa manager ’ s concerns. this required an assessment by qualified experts on the legal questions. the bank did not believe that it should itself seek to make such an assessment. there are many precedents in the bis central bankers ’ speeches private and public sectors for organisations adopting similar processes in such circumstances. in the bank ’ s view, this represented a proper, independent and rigorous process. that was the intention. the freehills report was highly critical of npa ’ s practices, which were in need of major reform. it also concluded, based on the material then available, that there was no evidence of a breach of australian law. that assessment was provided in good faith, and relied on in good faith. it was not proposed by freehills or anyone else at that time that, having been through a process that concluded there was no evidence of a breach of the law, the next step should be to approach the police. when the australian federal police ( afp ) were called in 2009 by the chairman of securency regarding the allegations made about securency at that time, the 2007 npa matters were all disclosed to the afp in a timely way. the freehills report and audit reports were provided to the afp when requested. there was no attempt to hide any information. it has been claimed by some that the written statement by the npa manager contained clear evidence of corrupt behaviour. in 2007, two senior legal practitioners from a leading law firm, who received this material directly from the author as part of their review and interviewed the author and others, did not view it that way in coming to their conclusion that there was no evidence of a breach of the law. even if it were ultimately to be concluded at some later time, with the benefit of hindsight, that the report reached an incorrect conclusion, it is completely without foundation to suggest that this process – seeking information, conducting audits, having an independent legal review, implementing the recommendations from the review and the audits, and relying on the independent advice received – represented an attempt at a “ cover up ” by anyone in the reserve bank. i turn now to securency. the rba board asked securency for its policies on agents in 2006 and the company put in place additional and stronger policies and procedures. following the audit at npa in 2007, the securency board requested a similar audit and terminated one of its agents ( which it shared with npa ). that audit found that, unlike