a wish for further consolidation, it is difficult to see how danmarks nationalbank could be criticised for forecasting higher private consumption in the coming years. in its most recent projection, danmarks nationalbank forecasts growth in gdp at 1. 4 per cent this year, rising to 1. 7 per cent next year. this may not sound of much, but it is above the forecast potential, so the capacity situation will normalise towards 2016. if economic growth is to reach a higher level while remaining sustainable, productivity growth must increase. reforms to boost productivity are on the government ’ s agenda for the near future, and i welcome these initiatives. denmark must stay on the path of economic policy reform. that is a precondition for future growth and prosperity. * * * now let me turn to the housing market. in general, prices have been showing a slight upward trend for the last 18 months. in january 2014, house prices were 6 per cent higher than in mid - 2012, while prices for owner - occupied flats had risen by 14 per cent in the same period. nevertheless, trading activity remains low, and the supply of homes for sale is still high – in a long - term perspective. but it has not risen any more over the last year. bis central bankers ’ speeches in recent years, economic activity – and hence the housing market – has developed unevenly across denmark. economic growth is increasingly a city phenomenon. this has been the case for many years and the same pattern is seen in other countries, but the trend seems to have accelerated in denmark in recent years. since 2008, there has been a strong influx of mainly young people and people with jobs to the capital region, while pensioners and unemployed people have moved out. especially young people aged 20 – 29 move to the cities in connection with education or training, and they increasingly stay there afterwards. this demographic development can be seen in the housing market. house prices are considerably more cyclical in the cities than in the rest of denmark. this is particularly true of the capital region and surrounding areas, which are typically also the “ first movers ”. in addition, house prices in urban areas have risen in real terms over time, reflecting factors such as underlying demographics, with still more people living in an area of a virtually given size. since the price of building a house is almost the same throughout the country, it is mainly land prices that have risen. the situation is exactly the opposite in the areas of denmark where people are

found. secondly, a credible resolution model for mortgage banks is re - established. i am also pleased to note that the credit rating agencies ’ reception of this amendment is predominantly positive. although this solution is not a silver bullet, moody ’ s concludes that the new legislation removes the refinancing risk on danish mortgage bonds. this eliminates a major source of credit risk, thereby supporting a high credit rating. bis central bankers ’ speeches it is essential for the mortgage banks to maintain sound credit policies, also after the legislative amendment. investor confidence in the long - term credit quality is all - important – irrespective of how the housing market develops. against that background, danmarks nationalbank recommends reducing the upper limit for deferred - amortisation loans – as a percentage of the value of the home at the time of mortgaging. this should apply to deferredamortisation loans underlying covered bonds, covered mortgage bonds or mortgage bonds issued by banks and mortgage banks. in this way, borrowers will gradually move away from the maximum loan - to - value ratio over time. this will further underpin the high degree of security in the mortgage - credit system, even if house prices plummet, and contribute to macroeconomic stability. experience shows that general changes in the amortisation profile, particularly the first - year payments, also have an initial effect on the price of housing, and hence on the macroeconomy. so the timing and dosage of restrictions on deferred amortisation should be considered carefully. in contrast, banks should not be restricted further from providing deferred - amortisation loans if such loans are financed in other ways than by issuance of covered bonds. mortgage lending is a particularly secure business model that differs fundamentally from banking and that is subject to special regulation. while mortgage banks finance their lending purely through issuance of mortgage bonds that match the loans, banks finance their lending via various sources of funding, such as deposits, issuance of covered bonds and issuance of senior debt. as a main rule, mortgage banks can take on credit risk only – and even this risk is contained through regulation of loan limits and redemption profiles. if a mortgage bank wants to have the same opportunities as a bank, it must obtain a banking licence. * * * now i will turn my attention to europe. here, the banking union is moving away from the design phase and becoming a cornerstone of the financial architecture. some people primarily see the banking union