| speeches | rba with some of the earlier data i noted, stress has declined since 2011, which probably largely reflects the fall in interest rates since that time. graph 6 unfortunately, while the hilda and sih data are rich in terms of the information provided, they are not very timely. we have, for example, only just received the 2016 data. so much of the discussion on household stress relies on more timely private surveys. these surveys measure stress in different ways. some focus specifically on mortgage stress. others look at housing affordability, including for renters. and still others attempt to measure financial ‘ comfort ’ more broadly than just housing. many of these suggest that housing stress has been increasing over the past year or so. looking at the history for which we have data for both the private and comprehensive surveys, it is a little difficult to reconcile their findings. but there do seem to be some methodological differences that mean some surveys might overstate financial stress somewhat. for example, in some of these surveys, self - assessed living expenses are used. if households include discretionary expenditure that could be cut back in an emergency, the amount of income available to meet scheduled repayments might be understated. furthermore, if actual mortgage repayments are used, those households that are routinely ahead of their payments schedule might be assessed as having little spare income for emergencies when in reality they have been building up buffers and have surplus cash flow. most of the measures i have discussed so far are more in the nature of potential financial stress. for some households this will likely turn out to be temporary until their circumstances change. but others http : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 02 - 20. html 9 / 14 21 / 02 / 2018 household indebtedness and mortgage stress | speeches | rba may find themselves in a prolonged period of belt tightening or, in the extreme, having to sell their property or default on their payments. in this latter case, financial stress will show up in nonperforming loans on banks'balance sheets and perhaps even in property repossessions or bankruptcies. what do these data tell us? banks'non - performing housing loans have been trending upwards over the past few years, although they remain very low in absolute terms at around 0. 8 per cent of banks'domestic housing loan books ( graph 7 ). much of this rise is attributable to a rise

of instability, and what reforms, if any, should be considered? as i pointed out earlier, one recurring theme in the debate has been the question of reserve assets. our second panel, chaired by george soros, will examine ways to improve the supply of reserve assets. is a diversification of reserve assets desirable, and if so, should it be actively promoted? is there a greater role for sdrs in the international monetary system, and if so, what reforms would be required to give sdrs a greater role? over the past decades, private capital flows have greatly increased. although capital account liberalization is clearly beneficial in the long run, it entails significant short - run vulnerabilities. the third panel, chaired by duvvuri subbarao, will take up the question of how to deal with these vulnerabilities. what are the appropriate policy responses, and what is the role for regulation and capital controls? one policy response has been the accumulation of reserves, which can provide a temporary shock absorber. however, reserve accumulation entails costs for the countries accumulating reserves as well as for the world economy as a whole. our last panel, chaired by masaaki shirakawa, will discuss alternatives to self - insurance. an obvious question here is the role of imf lending facilities. as already mentioned, the questions we address today are difficult and complex. someone who played an important role in trying to address them over several decades was jacques polak. sadly, he passed away earlier this year. reflecting on the efforts to reform the international monetary system since the bretton woods conference, jacques polak once suggested that “ those of us who toil at the international monetary system would do well to adopt sisyphus as our patron saint ”. in honor of jacques polak, let us then push the stone back up the mountain once more and start with our first panel. thank you for your kind attention.