The reality I think is more complex. As I said at the outset, the growth of credit has been part of the development of the economy for at least the past 120 years. Credit cannot grow faster than the economy forever. But the level of debt and the rate of growth of credit that the economy can sustain is not fixed. It can and has shifted over time. To learn the lessons of the pre-crisis period, we need to explore whether a shift occurred in the sustainable level of debt during the upswing of the last cycle and what we should expect for the future. There are many interrelated factors that might influence the sustainable level of debt in the economy. For example, some relatively slow-moving factors such as demographics, tax policy, housing supply and inflation are likely to play a role. But today I want to highlight two key factors that may have played a particularly important role in shifting the ratio of credit to GDP during the upswing of the last cycle. First, the level of long-run real interest rates and second, credit supply conditions, including credit spreads. Long-term interest rate The long-term real interest rate is crucially important both to the level of debt and to the price of the assets it finances. Structural changes in real interest rates are perhaps the most important factor in driving a shift in the sustainable level of debt.
Zeti Akhtar Aziz: Opening of Bank Negara Malaysia Beijing Representative Office and initiatives to promote bilateral trade and investment Remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the opening of the BNM Beijing Representative Office, Beijing, 18 November 2013. *  *  *  It is my great pleasure to welcome you to this official opening of Bank Negara Malaysia’s Beijing Representative Office. The opening of this representative office today is an occasion of unprecedented significance for us. This Beijing office is Bank Negara Malaysia’s very first presence in Asia. This is a reflection of the growing importance of China in the global economy and the international financial system and the very significant and longstanding financial and economic ties between Malaysia and China. This momentous occasion also marks the dawn of a new chapter as our bilateral relations transitions and evolves reflecting the significant changes taking place in our respective economies and financial systems. For many decades now, the foundation underpinning the strength and dynamism of our relationship is our ability to continually harness the complementarities that exists between our economies. While bilateral trade has consistently been expanding at double digit growth rates over the recent two decades, the breadth and depth of our relations have also evolved and expanded into greater financial linkages. In parallel to our growing economic ties, our financial institutions have also ventured into each financial systems, further strengthening our financial and economic connectivity.