is put together is obviously important. to this end, it is often worthwhile for people in the policy analysis process to develop a good dialogue with the compilers of these data. on occasion, well - trained people in the bureaucracy have been able to suggest methodological improvements to privately - compiled surveys. no survey of economic conditions should have much weight attached to it until we have seen its performance over a period of time long enough for some business cycle fluctuations to be observed. i grant that, in australia, a very long expansion means that this test is getting a bit demanding. but even within an expansion there are fluctuations in the pace of growth and a good business survey should pick these up. most surveys will be found, in my experience, to have given some false signals as well as some genuine ones. this issue of type i versus type ii errors can be critical in judging the state of affairs at key points in the business cycle, using survey data. it is in the area of financial prices where the proliferation of private data is perhaps most marked. the vast bulk of data on pricing of financial instruments is privately compiled, a result of the size of private financial markets and their continuous nature. where financial instruments are traded on exchanges, their prices are easily observed, and there are relatively few challenges associated with compiling pricing data. however, with the increasing shift towards over - the - counter ( otc ) and non - standard products, this task is more difficult and it becomes necessary to rely more on financial institutions'proprietary data. there is no real alternative to this, but of course we need to take care to be satisfied as to the accuracy and impartiality of the data and it is incumbent on private providers of data to be prepared to provide some assurance here. as central banks increasingly use such data sets to infer market attitudes to risk and expectations about the future ( a process which incidentally requires increasingly sophisticated analytical skills ), all these issues seem likely to grow in importance over the years ahead. many challenges will surely come our way. conclusion central banks are heavy consumers of information, and hence of statistics, and always will be. but the nature of the information we need to do our job, both in the monetary policy field and the financial stability field, is changing. the larger and more dynamic role played by the financial sector, and the greater prominence and impact of swings in household balance sheets, raise as many challenges for our statistical collections, and for the way we process them, as they

money, attempts to impart stability by targeting closely the money stock were much less successful in practice than in theory. most countries have moved away from that idea towards some sort of implicit or explicit targeting of the ultimate objective, prices, using the short - term nominal interest rate as the instrument. yet it would be a mistake to think that this shift signifies that the behaviour of the financial sector has once again come to be viewed as unimportant to the economy. on the contrary, the way in which the financial system responds to financial prices, to regulation ( or deregulation ) and to the demand for products by the household and business sectors, and the way in which it is constantly innovating, has a major bearing on the path of economic activity. moreover, the importance of these links is growing. opinions vary on whether or not this is a good thing. it has been claimed, for example, that the growth of derivatives markets potentially enhances economic stability, insofar as risks inherent in life can be shifted from those who do not wish to run them to those who do. it has also been claimed that such innovations are highly dangerous –'financial weapons of mass destruction'was one colourful description. 3 either way, an interaction of financial processes with the real economy is in mind ; what is at issue is where the risks inherent in economic life are ultimately borne, and whether the people running them understand them and have been paid an appropriate price to do so. this is an area http : / / www. berkshirehathaway. com / letters / 2002pdf. pdf where the statistical collections find it hard to keep up, particularly with the proliferation of financial activity which crosses national borders or occurs off - balance sheet. another trend which is playing a powerful role in the modern economy is the growth in the household sector's assets, occurring in parallel with the increase in households'access to credit. the growth of aggregate wealth, together with the constant search for new products and new business by financial intermediaries, has seen the increasing collateralisation of the housing stock. your home was always the collateral for a mortgage loan, of course, but these days you are much more likely to be using it as collateral for a loan for some other purpose as well. possibly you are doing so at a stage in life when you would traditionally have been debt free. if you are at all creditworthy, moreover, there is no shortage of institutions lining up to lend to you. this