. the financial stability board has been clear about the priorities over the coming year, under the headings of implementation of basel iii changes, continuing towards completion of a regime for “ too big to fail ” financial institutions, making derivatives markets safer and making sure “ shadow banking ” activities have appropriate oversight. australia, as chair of the g20 this year, welcomes this prioritisation and has indicated that it supports the fsb as it seeks to achieve concrete results by the time of the leaders ’ meeting in brisbane next november. australian regulatory authorities continue, meanwhile, carefully to implement internationally agreed reforms, with due regard to local conditions. with those remarks, chair, we are here to respond to your questions. bis central bankers ’ speeches

the corresponding challenges has an inverse relationship with the level of development. allow me to provide some additional information in this regard : • the international monetary fund estimates that the median food share in total spending in advanced economies is 17 percent, compared to 31 percent in emerging and developing countries. 4 in addition, it is important to keep in mind that in a number of these countries, or in specific sectors of the population, the corresponding figure is much higher. 5 oecd - fao agricultural outlook 2013. shaun k. roache, “ what explains the rise in food price volatiliy? ”, imf working paper, wp / 10 / 129, may 2010. s. k. roache, op. cit. international monetary fund, world economic outlook, september 2011. k. anderson, m. ivanovic and w. martin, “ food price spikes, price insulation and poverty ”, policy research working paper, wps6535, the world bank, july 2013. bis central bankers ’ speeches • in this context, it is not surprising that, according to world bank calculations, the rise in food prices in 2010 – 2011 resulted in a net increase of 44 million in the number of people living in extreme poverty in developing nations. 6 • additionally, some recent studies conclude that increases in international food prices may give rise to a significant deterioration of democratic institutions, and to a higher number of internal conflicts, in poorer countries. 7 this underlines the importance of clearly understanding the factors that affect both the level and the volatility of food prices, as well as the challenges that public policy must confront in this respect. clearly, fluctuations in food prices are largely determined by supply and demand factors inherent to these markets, such as the pace of world economic activity, demographic changes, the implications of higher income levels in some countries for eating habits, climate related factors, and the availability of water and arable land, among others. however, the analysis becomes more complicated given that there are events outside the strict sphere of food markets which are affecting food price developments. it is worth to highlight in this regard that developments in energy markets affect food prices through a more intense use of energy in the production, processing, storage, and transportation of these commodities, as well as through the more widespread production of biofuels and the resulting rise in the use of food and agricultural inputs for this purpose. second, a growing interconnection is being observed between financial and food markets, as reflected