housing prices – it remains a bit below average. and after deducting offset balances, household credit growth has been flat for the past year or so. moreover, the level of household credit ( net of offset accounts ) has declined as a share of household disposable income. the decline in this measure of household indebtedness is apparent in several other indicators. for example, average loan - to - value ratios for new loans have declined over this phase of monetary policy tightening. also, loan discharges from property sales have increased, and by more than the rise in new lending ( which is shown as commitments in graph 7 ). these trends are likely to reflect incentives to reduce or limit indebtedness in response to higher interest rates. r e s e r v e b a n k o f au s t r a l i a graph 6 household credit % % growth * household household net of offsets % % per cent of annual hhdy * * housing net of offsets personal * six - month - ended annualised ; dashed average post - 2008 calculated gross of offsets. * * household disposable income. sources : abs ; apra ; rba. graph 7 housing loan discharges * quarterly ; seasonally adjusted $ b $ b value commitments discharges % ratio of discharges to loan commitments % * discharges and commitments are net of external refinancing. sources : abs ; apra ; rba. increases in the cash rate have led to tighter financial conditions for businesses increases in the cash rate have also flowed through to higher business lending rates and higher corporate bond yields, although pass - through has varied across different markets ( graph 8 ). average rates on large business loans have increased by more than 425 basis points over the tightening phase, compared with around 310 basis points for small businesses. however, small businesses continue to face substantially higher interest rates than their medium and large counterparts. large businesses with access to wholesale funding markets have benefited from favourable conditions in those markets. in particular, corporate bond yields have risen by less than the rise in riskfree yields over the tightening phase because credit spreads have narrowed noticeably. graph 8 cost of business debt % % business lending rates * small business medium business large business % % corporate bond yields * * 5 - year yields 3 - year yields * average variable interest rate on credit outstanding. * * for bbb - rated non - financial corporations. sources : apra ; bloomberg ; rba. despite

a large economy, the extent of that annual flow of saving is now globally very significant. in absolute terms, according to the available national income statistics, china is in fact now the world ’ s largest saver. its gross national saving, at an estimated us $ 3. 2 trillion, exceeded that of both the united states and the euro these and subsequent trade figures refer to merchandise exports. bis central bankers ’ speeches area in 2010. 2 its gross investment is also the world ’ s largest – at an estimated us $ 2. 9 trillion in 2010. the gap between these two figures – around us $ 300 billion – is of course china ’ s current account position. that is the extent to which china, in net terms, exports capital to the rest of the world. as you might expect, to deal with this large volume of saving china has some large banks. as measured by total assets, 12 of the world ’ s 100 largest banks are chinese. this is a higher number than for any other single country, including the united states. between 2005 and the start of this year, the shanghai and shenzhen stock exchanges grew by over 800 per cent. as measured by the market capitalisation of listed domestic companies, the shanghai stock exchange is still far smaller than the new york stock exchange, but it is now more than two - thirds the size of the london and tokyo stock exchanges. in terms of turnover, the annual value of share trading on the shanghai stock exchange in 2009 surpassed that of each of the london and tokyo exchanges. 3 asian bond markets, and particularly those in china, have also grown in size. five years ago, total domestic debt securities outstanding in china were less than half of those outstanding in countries such as france, germany and italy ; today these markets are roughly all comparable in size. 4 so it is not just the centre of gravity of economic activity that is shifting to asia – the weight of financial assets is also shifting. now this is a slower process since the stock of wealth is a result of a long accretion over time and economies that rapidly become large in production terms may have a smaller stock of wealth than countries that have been similarly large for a long time – such as europe and the united states. so at this point the advanced industrial countries still account for the lion ’ s share of global wealth. nonetheless, things are moving quickly. within the remainder of the careers of many of us here today, we will very likely see a pretty substantial change in relative positions.