##trips their desire to create new assets. a stronger global investment environment would be likely to see global interest rates rise and this is something that we should all hope occurs sooner rather than later. the issue that many countries are struggling with is how to do this – that is, how to improve the investment climate. very accommodative monetary policy is playing a role here. but there are some real limitations to this and, in some countries, these limitations are becoming increasingly evident. what is needed is a genuine improvement in the underlying investment climate. and so this is where the issues that i have talked about tonight come in. the australian economy clearly has some challenges ahead, but we would be selling ourselves short if we dwelt exclusively on these challenges. our economy does have some very strong foundations upon which we can build – i have talked about our links with asia, our dynamic population and our natural resources. these foundations give us opportunities that few countries have. they should also provide us with some confidence that new investment can deliver reasonable returns. this sense of confidence would be enhanced by further steps to improve the environment for the accumulation of human capital. if we are able to do this, then i hope that it would become normal for us to live in a highly productive, globally competitive economy with sustainably high living standards and returns to savers. thank you for listening and i look forward to any questions that you might have. bibliography kennedy j, t lyons and f quinn ( 2014 ), “ the continuing decline of science and mathematics enrolments in australian high schools ”, teaching science, 60 ( 2 ), pp 34 – 46. < http : / / www. oecd - ilibrary. org / science - and - technology / oecd - science - technology - and - industry - scoreboard2013 _ sti _ scoreboard - 2013 - en >, and schwab k ( ed ) ( 2013 ), the global competitiveness report 2013 – 2014, world economic forum, geneva, available at < http : / / www. weforum. org / reports / global - competitiveness - report2013 - 2014 >. bis central bankers ’ speeches

, the year of the financial crisis. the results of this exercise are shown in graph 6, with the top line showing the median increase in the saving ratio for households with high financial assets and the bottom line showing the change for those with low financial assets. it is clear that for all five income quintiles, households that had relatively high levels of financial assets before the financial turmoil increased their saving by more than households with relatively low levels of financial assets. graph 6 this evidence is consistent with the idea that the fall in financial asset prices over recent years led households to increase their saving out of current income in order to rebuild their asset positions. when share prices fell, household wealth declined and, as a consequence, financial assets include superannuation, cash investments ( i. e. bonds ), equity investments, trust funds and life insurance. bis central bankers ’ speeches increased saving was required to attain any desired level of wealth. this was particularly the case for those households that held a lot of financial assets. this experience is the flipside of what happened during the decade to the mid 2000s. during that period, household wealth increased substantially by way of increasing asset prices, despite households saving relatively little out of their current income. the second aspect of the individual - level data that i would like to draw your attention to is the relationship between the change in the saving ratio and how much uncertainty a household feels about the future. this is a difficult issue to investigate, but it is an important one as the financial crisis of 2008 / 09 all too clearly illustrated. during that period, uncertainty around the world increased greatly, with the result that both households and businesses delayed discretionary spending and increased their savings, amplifying the downturn in the global economy. in the hilda survey, households that are in employment are asked each year how worried they are about the future of their job. 6 using the responses to this question, we classify households into four groups : those that have become less worried over time ; those that have become a little more worried over time ; those that have become a lot more worried ; and those where there has been no change. as before, we calculate the change in the median saving ratio for each of these groups and the results are shown in graph 7. it is clear from this graph that the largest increase in saving ratios is for those households that have become a lot more concerned over time about losing their job. and conversely, the smallest increases in saving have been for those who have become less