23  Defined as the rate of change of aggregate bank credit (domestic bank loans to the nonfinancial sector) relative to GDP, relative to its mean, from previous trough to peak. 33  All speeches are available online at www.bankofengland.co.uk/speeches  33  Other potential macroprudential instruments included those aimed at influencing lending standards - for example, through setting loan to value limits (LTV), loan to income limits (LTI) or margining requirements on collateralised borrowing in financial markets. A third set of potential instruments focused on making market infrastructures more resilient and improving financial market practices – for example, by mandating central clearing, through trading venue design and through enhanced disclosure requirements. So how has thinking on macroprudential instruments moved forward in the period since? Chart 22 documents the use of different types of macroprudential tool over the past decade in a panel of advanced economies.24 Perhaps contrary to expectations, the majority of interventions have fallen into the “lending standards” category, a group that includes LTI and LTV requirements. By numbers, such actions account for around two-thirds of overall macroprudential actions over the period since 2010. At the other end of the spectrum is the CCyB. That has only been used by 6 countries to date. This is surprising given that it is the only tool that has a well-defined operating framework internationally and which includes jurisdictional reciprocity. A potential explanation is that the Basel guidelines suggest the buffer should be activated when excess credit growth threatens an increase in system-wide risk.

Generally, it is appropriate to increase the contributivity of the system and its transparency, ensuring a level of sufficiency for those households with more limited resources. Also, establishing automatic adjustment mechanisms would help stabilise the system, adapting it to demographic and economic changes. Indeed, several EU countries (such as Germany, Sweden and Italy) have already established a link between the level of benefits or retirement age and life expectancy. Combating climate change and smoothing the transition to a more sustainable economy are another of the fundamental challenges we face. Fiscal policy should take the lead in attaining objectives in this field, both to deter the most environmentally harmful activities, through an internationally harmonised tax system, and to foment the public and private investment needed to develop cleaner technologies and alleviate the social costs of the transition. As to inequality, we began the current crisis with a higher level than was the case at the end of the previous upturn, and everything suggests that this crisis will entail a further increase. The employment protection and income support measures approved should contribute to lessening the vulnerability of the households most affected. Also, many of the reforms intended to improve productivity or lower unemployment and job insecurity are vital for  7  reducing inequalities. The minimum life income scheme could, in coordination with regional government arrangements, contribute to alleviating extreme poverty. In this connection it will be important, as provided for in the scheme’s founding legislation, to assess its application on an ongoing basis.