  Horizon scanning  One of these is that we are collecting evidence of the effects of regulations on and new risks faced by individual banks by pooling intelligence gathered in different parts of the Bank as part of a horizon scanning process. 27  25  Prudential Regulation Authority Policy Statement 22/17, https://www.bankofengland.co.uk/-/media/boe/files/prudentialregulation/policy-statement/2017/ps2217.pdf?la=en&hash=38A16F0135791C4803EC1948DBF86CFB8330DBCB. 26 Prudential Regulation Authority Policy Statement 12/17, https://www.bankofengland.co.uk/prudentialregulation/publication/2016/strengthening-accountability-in-banking-and-insurance-amendments-and-optimisations. 27 See ‘Looking both ways’, a speech by Sam Woods, 10 July 2017, https://www.bankofengland.co.uk/speech/2017/looking-both-ways. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  The process draws on supervisory and market intelligence, macroeconomic analysis, and thematic analysis of trends in key financial markets. With the information collected through this process we can then reflect on whether any developments warrant dynamic adjustments to be made to microprudential regulations.While horizon scanning helps us make decisions about dynamic adjustments, as well as supporting a well-informed supervisory oversight of banks’ behaviour, it does not absolve banks from their responsibilities to identify key risks as part of their own risk management, hold financial resources to mitigate those risks, or deal with the PRA in an open and cooperative way.   Evaluation work  The other way we are gathering evidence on the effects, including unintended consequences, regulations are having is running evaluation exercises. This is something that is happening internationally. A framework for post-implementation evaluations was developed by the Financial Stability Board in 2017 reforms.

The reversal in overall borrowing during 2013 was driven by increased credit card and mortgage debt among the young and those with high credit scores. While this suggests that lenders are concerned about the safe underwriting of such loans, it also points to the overall importance of borrowing by younger individuals. Not only did borrowers under age forty-nine take on more credit card and mortgage debt in 2013, they also did most of the borrowing to finance auto purchases and college educations. This is not new – historically, younger individuals account for most new loan originations, while older individuals on average pay down their outstanding debt. Nonetheless, while borrowing for such things as cars and houses is up among younger individuals, it remains somewhat subdued. Now, this overall picture – young borrowers getting loans while older borrowers are reducing their debts – makes sense, and it is consistent with a growing population and improving income prospects for the young. The fact that (unlike 2006) we now see reductions in mortgage debt for the least creditworthy borrowers tells us about how unusual lending was during the credit boom of the mid-2000s, and it is instructive and reassuring to see that today’s patterns look different. In spite of the improved outlook for income growth and consumption implied by these changes in the way households view and use debt, some imponderables remain on the horizon.