loans, higher than the us and uk at their peaks, and still rising. the figures also illustrate the good performance of australian banks during this period. there are a number of reasons for the contrasting performances of the us and european banking systems. one is that there were more timely and effective corrective actions taken in the us to repair banks ’ balance sheets than has been the case to date in europe, both by government authorities and by the banks themselves. the tarp ( troubled asset relief program ) program, the early us stress tests, and various actions to recapitalise troubled banks and dispose of poorly performing assets were all important in this regard. a second reason is one that i have already alluded to. the events of recent years have amounted to a two - stage crisis, and the second stage of it was specifically european ( or more accurately, euro area ) in focus. the third is the interdependency between growth and financial stability. it is easier for banks to recover in an environment where the economy itself is growing, and in europe growth has been sluggish at best in the period since the initial downturn. conversely, it is harder for the economy to grow without a strong banking system. as i have already remarked, this two - way dynamic has been weighing on the euro area for some years. bis central bankers ’ speeches the lingering after - effects of the crisis can be seen not just in the effects on the banks. there are continuing effects on a wide range of economic variables in the major economies. to summarise these i will pick just three : output, employment and government debt. my next chart shows the levels of output and employment in the same set of economies ( graph 2 ). graph 2 again, we see some major ongoing effects from the crisis and the contrasting severity among the four economies that i have focused on. one result commonly seen is that economic recovery following a financial crisis is typically slower than the recovery from an average recession, and that has certainly been the case in this instance. in the united states, gdp regained its 2008 peak level in mid - 2011 but growth in the recovery period has generally remained only around trend. this is in contrast to the normal pattern of rapid catch - up seen after earlier recessions. employment in the us has yet to regain its pre - crisis peak. in europe, output and employment are still well below pre - crisis levels. australia, as i have said, didn ’ t have a recession, with output

so strongly centred in the north atlantic countries ’ financial systems, perhaps that is no big surprise. however, while that historical cooperation is a strength on which to build, it is also important that the system we build looks forward, and acknowledges that much of the future growth will be in asia. it is also important that those of us in the asian time zone continue to strengthen our capacity to engage effectively in the international groups of which we now have the privilege and responsibility of membership. major themes in regulation there are many components to the international agenda for regulatory reform. the g20 is the body that has accepted, or perhaps asserted, high - level oversight over these efforts. the fsb is the body that has accepted the task of trying to ensure a coordinated effort, bis central bankers ’ speeches respecting the integrity and independence of the standard - setting bodies and addressing risks itself where required. as you know, australia has the responsibility of the g20 presidency this year. australia is highly supportive of the way the chair of the fsb has structured the efforts around four key themes. they are : • increasing the resilience of financial institutions, which in the main means implementation of the basel iii standards for banks • reforming markets for trading, settling and clearing derivatives • addressing risks to the financial system from certain types of “ shadow banking ” • addressing the “ too big to fail ” problem at a global level. highlighting these four themes doesn ’ t mean other things are forgotten. but it is an attempt to prioritise, to focus energies and to use the opportunity of the leaders summit in brisbane, australia, in november as a focal point for our efforts to get some important things across the line this year. basel iii the basel iii process is well on track. most countries are well placed to implement the new international capital and liquidity standards in line with agreed timetables. remaining policy details are being ironed out, with the leverage ratio requirement recently finalised, and further proposals on the net stable funding ratio released by the basel committee on banking supervision ( bcbs ). the committee is continuing its important work to address the excessive variability in the calculation of risk - weighted assets. on the question of capital standards, it is frequently claimed that pressing major banks to hold more capital will impair economic growth. there are two points to make about this. the first is that, in situations of acute capital deficiency, it is best to address the problem as quickly as possible. consider the contrast between the united states and europe