Mortgage companies should therefore take housing market fluctuations into account when issuing covered bonds. Conclusion I think it is fair to say that housing finance in Norway is in its infancy. There is a large proportion of adjustable-rate loans. Fixed-rate loans offered in Norway are less customerfriendly than, for example, in Denmark, where it is less expensive to cancel a fixed-rate mortgage and where there is a secondary market, providing risk diversification. Mortgage companies have a limited role in housing finance. Loan-to-value ratios are in some cases alarmingly high. And last, but not least, banks finance their housing loans by means of shortterm asset swaps in foreign markets. This is not a sustainable solution. I hope that this forum can contribute towards the development of a better foundation for housing finance in Norway. 1  See Van den Noord, Paul (2005): “Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence”, Économie Internationale 101, pp.29–45. This paper shows that house price volatility is higher in countries where tax regimes favour owner-occupied housing. See also IMF (2004): World Economic Outlook, September, p.81, where house price volatility is higher is countries where adjustable-rate mortgages are common. BIS Review 8/2010  3  4  BIS Review 8/2010  BIS Review 8/2010  5  6  BIS Review 8/2010  BIS Review 8/2010  7  8  BIS Review 8/2010  BIS Review 8/2010  9  10  BIS Review 8/2010  BIS Review 8/2010  11

Global financial markets remained volatile in the second quarter of 2015, which was attributed to the continued divergence among global monetary policies, the uncertainty surrounding the Federal Reserve (Fed)’s normalization plans and developments regarding the Greek debt crisis. In this period, the volatility in long-term rates reached quite high levels, especially across advanced economies (Chart 1), which also affected emerging-market rates. Thus, portfolio flows to emerging-markets weakened (Chart 2). The global economic slowdown of 2014 continued into the first quarter of 2015 largely due to emerging economies. Despite signs of economic recovery in Europe, geopolitical tensions continued to restrain Turkey’s external demand. The volatility across global markets had implications for the Turkish economy as well, causing fluctuations in financial indicators amid domestic uncertainty. In this period of heightened volatility in long-term interest rates of advanced countries and added interest-rate sensitivity in emerging economies, the interest-rate corridor and the tight liquidity policy we have been implementing played a major role in shielding the economy against global shocks. Moreover, our structural and cyclical measures supporting FX liquidity, core liabilities and long-term borrowing strengthened the economy’s resilience. 1. Monetary policy and financial conditions  In view of the uncertainty over global markets and the volatility in food and energy prices, we maintained a cautious monetary stance in the second quarter of 2015. In this period, we kept interest rates unchanged, but continued with the tight liquidity policy to contain risks to core inflation and inflation expectations.