This latter factor, combined with the worldwide fall in the prices of manufactured goods, meant that import prices in Australian dollars fell sharply until recently which encouraged import volumes to rise strongly. This is a normal process whereby a floating exchange rate relieves the pressure on domestic supply and inflation, but at some cost to the balance of payments.
This relationship has continued to hold throughout the market turmoil, perhaps because of the comprehensive regulatory and statutory frameworks associated with covered bonds in most European countries. To date, not many covered bonds have been issued in the United States, for several reasons. First, the Federal Home Loan Banks (FHLB) can tap capital markets and provide cost-effective funding for mortgage assets.