But before discussing that, I would like to illustrate some of the changes in the behaviour of economic variables that have given rise to the changed perception of the Australian economy. The first clear sign that the Australian economy was showing a new-found stability was the way in which it handled the Asian crisis.
The improvement of financial markets and strengthening of their functions are also important tasks for a central bank. Indeed, financial markets are where a central bank conducts its monetary policy operations and whether they function properly is extremely important in terms of the smooth transmission of policy effects.