Would they be set once and left alone or varied over the course of the economic cycle? Or would they be deployed only in exceptional circumstances? What governance arrangements are needed? We need to be very conscious of the costs of using macro-prudential tools when considering whether to use them. Some tools have the potential to damage financial system efficiency.
The Australian mineral boom is now well documented, and expected to continue, if not intensify. The drivers in China and elsewhere look reasonably sustainable and as a low cost producer, Australia appears better positioned than most to weather any reduction in Chinese prices. The strength of the mineral boom has meant a strong Australian recovery and a very strong AUD currency.