in some aspects, also been strengthened : all central banks have now adopted a quantification of their price stability objective ; everyone is aware that symmetry in implementing their mandate is crucial ; everyone is putting increased emphasis on communication to impact monetary and financial conditions. what may have changed forever is the way monetary policy operates through a diversity of tools. it is very unlikely that central banks will, in the future, rely solely upon one single instrument : the short - term interest rate. financial frictions will have to be taken into account, especially when looking at the transmission mechanism. furthermore, we now know that the zero lower bound is not simply an intellectual curiosity and may effectively constrain policy making. that means that several instruments, including in the macroprudential field may have to be used simultaneously. liquidity provision will likely play a central role in policymaking in the eurosystem for some time to come. second, i have made the case for an active monetary policy when inflation has reached dangerously low levels. but there is always a risk of expecting too much and “ overburdening ” monetary policy. it should be recalled that monetary policy cannot by itself increase growth. it also, faces “ diminishing returns ”. the longer interest rates are kept at low levels, the greater the risks for financial stability. bis central bankers ’ speeches current easy monetary conditions should be used to create environment conducive to longterm growth. there is a clear message coming out from the last g20 meeting. economic policy should aim at raising the equilibrium interest rate by fostering opportunities for productive investment, modernising infrastructures and improving the quality of public spending. that can only be achieved through broad - based reform in both goods and labour markets. ultimately, only strong and determined action can restore durable growth. the opportunity is there and should not be missed. bis central bankers ’ speeches

, and was more than double the investment of our second largest investment partner, the usa ( vamplew 1987 ; rba 1997 ; ukhov and goetzmann 2005 ). as at the end of 2012 the stock of foreign invested capital that came via the uk amounted to almost $ 500 billion, and it is still growing ( it rose at an annual average compound rate of more than 6 per cent over the past 10 years ) ( abs 2013a ). 2 the stock of chinese inbound investment has been growing at 20 per cent over the past decade, but is estimated at only 2 per cent of the combined total from the us and uk. similarly, and perhaps more surprisingly, the stock of australian investment abroad imf direction of trade statistics. it should be noted that the country level data in abs ( 2013a ) are based on the country of residence of the creditor or the debtor. since london is an international financial hub, for some transactions the ultimate owner or recipient may reside in another country. bis central bankers ’ speeches remains concentrated in the uk and the us – though that is beginning to change now, with a bigger focus on asia. that accumulated inbound investment has helped australia become a very affluent nation, augmenting our own national savings to a significant extent. according to angus maddison ’ s data set, within 80 years of the founding of a penal colony on the shore of sydney harbour, about a kilometre from our present location, australia ’ s real gdp per head matched the uk ’ s ( maddison 2003 ). today, australia ’ s real gdp per head of about $ 44, 600, measured at purchasing power parity, is noticeably higher than the uk ’ s ( $ 36, 900 ), though for the uk that comparison is adversely affected by the economic weakness in recent years. 3 such an outcome is perhaps not surprising given the endowment of land and natural resources that australia has. opening up of large areas of land for agriculture enabled australia to enter powerfully the markets for grain and wool. agriculture was a major source of wealth over most of our history ( and many predict will play a big role in future ). the gold rush of the mid - nineteenth century helped to propel the city of melbourne in particular to globally significant size and affluence ( though there were later excesses that led to a serious depression ). the things the dutch and others couldn ’ t see under the ground when they surveyed the inhospit