nominal exchange rate depreciation that followed reduced the cost of australian labour in foreign currency terms, helping to guide labour that was now in surplus in the resources sector back into other traded sectors. the nominal twi depreciated by 20 per cent from the end of the boom to 2019. by itself, however, this depreciation wasn ’ t sufficient to restore the level of competitiveness of australian labour to its pre - boom levels and absorb all of the economy ’ s spare capacity. that was achieved by slower growth in the cost of australian labour in australian dollar terms relative to our trading partners. indeed, there followed a long period of low wages growth in australia. for example, annual wpi growth dropped to rates that were 1 percentage point below pre - mining boom norms. more importantly though for competitiveness, growth of unit labour costs dropped by a similar amount. meanwhile, inflation averaged 1. 9 per cent, just under the inflation target range, from the end of the mining investment boom up to the pandemic. it took quite a few years after mining investment had peaked for the real australian twi to return to be close to its pre - mining boom level. while slower wages growth contributes only gradually to adjustments in the real exchange rate, this is not true of the nominal exchange rate given it can be much more flexible. this raises the question : why didn ’ t the flexible nominal exchange rate adjust in a way to facilitate a more rapid adjustment of the real exchange rate? one notable feature of this episode was that the depreciation in the nominal twi didn ’ t start in earnest until around 18 months after the peak in the terms of trade. this may have in part reflected expectations for the terms of trade, which for a time remained at elevated levels even when the actual terms of trade had declined. [ 5 ] it is also likely to have reflected the effect of very low interest rates globally and unconventional monetary policies adopted by the major advanced economies in response to the global financial crisis. meanwhile, the reserve bank eased monetary policy from late 2011 in response to the prevailing weaker economic conditions in australia. however, from around 2016, the bank was balancing the case for a faster return of inflation to the target range by lowering the cash rate further, against the medium - term risks associated with an increase in what were already high levels of household debt. [ 6 ] the board ’ s decisions sought to limit the buildup of financial imbalances that can be a source of instability down

##dging products that are already available. in this regard, i welcome the australian financial sector ’ s efforts to support the development of an rmb market here in sydney, in particular, by ensuring that the current and future rmb product needs of australian corporates are met, and that clients have ready access to information. another encouraging sign is the recent announcements by two chinese banks operating here in sydney regarding rmb clearing services. conclusion the internationalisation of the rmb – and china ’ s associated move towards a liberalised capital account and more flexible exchange rate regime – has the potential to create a seismic shift in the international monetary and financial landscape. and while china clearly has an interest in getting this process right, the rest of the world – including australia – also has a strong interest in the outcome. history teaches us that financial deregulation is an inherently risky process, but that there are substantial payoffs if it is done well. conferences like this are an important part of understanding this whole process and i wish you all the best in exploring the challenges and opportunities that lie ahead. for an overview of the results of this survey, see ballantyne a, m garner and m wright ( 2013 ), “ developments in renminbi internationalisation ”, rba bulletin, june, pp 65 – 74. bis central bankers ’ speeches