Úvodné slovo guvernéra P. Kažimíra na konferencii 20 years of Macroprudential Policy in Europe

Ladies and gentlemen,
Distinguished guests,
Dear colleagues,

We’ve joined hands with the Bank of Finland and SUERF for this conference titled 20 years of Macroprudential Policy in Europe – Looking back and Looking Ahead.

These are extraordinary staggering times, for anyone dealing with monetary policy and financial stability.

Last week, the European Central Bank delivered a tenth consecutive hike of its key interest rates and I sincerely hope it was the last one.

We’ve traveled far in our fight with high inflation and now it remains to be seen how forceful and effective the cumulative effect of our tightening really is, will be. The jury is still put there, and we need couple of months to deliver the judgement.

Inflation, however, is not the only issue we’re dealing with.

Our economies are facing shocks unseen before, or at least not for a long time. The recent episodes of bank stress have proven, that there are still destructive forces threatening smooth functioning of financial markets. There are still triggers that mustn’t be pulled.

I think it’s the right time to sit down and reflect on our experience, our current knowledge and the possible future of macroprudential policy, that can help us through these challenging times.

As we have been actively using macroprudential policy in Europe for about 20 years, we have more and more experience to evaluate and learn from.  This, especially, is the case of the National Bank of Slovakia.

Over the past nine years, we have activated a wide range of borrower-based measures and are one of the most active macroprudential authorities, laboratories, in Europe. All this in addition to mandatory capital-based measures.

This is, of course, no coincidence.

After the global financial crisis, Slovakia experienced one of the highest growth rates of mortgage loans within the European Union.

This, since 2016, has also been reflected in a very dynamic (often double-digit) growth of residential property prices.

Such a development seen as considerable by international authorities such as the European Central Bank, the European Systemic Risk Board or the International Monetary Fund, required a very proactive and prudent approach.

I’d like to emphasize that the possibility of implementing macroprudential measures at the national level has been an inevitable part of the successful macroprudential policy we have pursued.

The national flexibility and the opportunity to tailor our decisions to the domestic market’s specificities helped us design all relevant measures.

There are ideas and suggestions to centralize macroprudential policy at the European level. I’m not sure it’s the best idea. Coordination, sure, but we need to be able to deploy country-specific measures where and when necessary. 

It’s also beneficial not to share macroprudential powers. To be the sole “proprietor” allows us to be effective, on time and efficient.

Thanks to all the work done. We do not expect a significant increase in household credit risk. Even in the current challenging environment.

Yet, we’re not complacent and take very seriously that things could get worse. We still have a lot to learn.

Today, Slovakia has one of the highest home ownership rates in Europe.

It’s necessary that residential and commercial real estate markets, considered key markets, must be thoroughly analyzed and understood.  

Boom and bust cycles in these markets have long-lasting consequences for the real economy, households, non-financial corporations, and financial stability.

This, together with the possible structural changes imposed by COVID-19 in the form of more home offices and less office space required, is an issue where thorough research supporting macroprudential policies can shed light on our unanswered questions.

I’m still not entirely convinced we fully understand what’s happening in Europe’s real estate markets. We need more data, enhanced analyses, and run scenarios to grasp possible events and impacts better.