##minant of aggregate demand are consumers ’ expectations. chart 3 gives additional evidence on how consumers ’ expectations and confidence declined in parallel with private consumption during the recession period. more recently, consumer confidence has increased while the indicator on major purchases, which is an indicator for durable goods consumption, has declined reaching a record low level. let me now turn to the second question : how do financial variables and monetary policy affect private consumption decisions and retail trade? loans to households, whose developments are presented in chart 4, are an important indicator for the analysis of consumer spending. hence, the ecb regularly monitors household loans as they are a key channel for the transmission of monetary policy. allow me to elaborate a little bit more on this point. loan developments in the euro area can be explained by their main determinants, such as house prices, various interest rates and real income. in line with this, we saw that the annual growth rate of loans to households – after some months in negative territory – has turned positive towards the end of 2009 and since then has continued to increase steadily [ last observation : 2. 9 % in august 2010 ]. this positive annual growth of loans to households reflects mainly developments in lending for house purchase. loans for consumer credit are still contributing negatively to overall loan growth. these latest developments in loans to households confirm the broad consistency with business cycle regularities, which suggest that the turning point in the growth of loans to households takes place early in the economic cycle. the loan development needs to be seen in the context of the current low level of interest rates. indeed, bank lending rates for loans to households for house purchase declined further in the second quarter of 2010 – still to a lesser extent than in the previous quarters. the levels of lending rates for loans to households we are currently seeing are comparable to the levels observed in 2005. for shorter - term maturities, the interest rates are even lower than in 2005. still, at the same time, the net percentage of banks reporting a tightening of credit standards for loans to households remained unchanged in the second quarter of 2010, compared with the previous quarter. overall, we can see that the ecb ’ s monetary policy since the onset of the financial crisis has been very much supporting private consumption demand, and thereby retail sales, while keeping a clear orientation to preserve price stability in the medium term. during the crisis also fiscal policy was used to stabilise consumers spending and retail sales. this raised obviously the question on whether fiscal policy in a period of

from libor to sonia : a bridge to the future remarks given by andrew hauser, executive director, markets at the ‘ is your business prepared for libor? ’ webinar 18 september 2020 i am grateful to stefania spiga for her help in writing these remarks, and to amber evans, tom horn, al hughes and alieda moore for their input and guidance. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice thank you phil. it ’ s great to be with you, and it ’ s great to have such a fantastic line up to discuss this vital issue for every company in the uk. we ’ re here today to talk about what it will take to get your business ready to transition away from libor. but i want to start somewhere different. i want to start with a bridge : hammersmith bridge in london, to be precise. it ’ s been around forever. people love it : it can carry over 20, 000 vehicles a day. and to the naked eye, it seems in the prime of health : beautiful to look at, safe as houses? well no, actually : it ’ s completely unsafe. below that shining metalwork, there are big and growing cracks – and sooner or later, if nothing is done, someone driving over it is going to fall headfirst into the thames. so the local council has closed the bridge – it had no choice. but the disruption has been huge. journeys that used to take a few minutes can now take hours. there are traffic jams everywhere. and protests have become so vocal that the secretary of state for transport has responded by setting up a dedicated task force. libor ’ s a bit like that bridge. it ’ s been around since the 1960s. every company has got to know it inside out, and built it into their daily routines. and it ’ s popular – very popular : almost 400 trillion dollars of financial instruments, across every part of the global economy, are tied to libor in some way. but just like that bridge, it isn ’ t safe. structural change in the financial markets mean that the trading that used to underpin libor – term unsecured lending between banks – has virtually disappeared. in its place lies little more than informed guesswork. and that just isn ’ t a viable long - term basis for the debt and financial instruments on which all your businesses rely. sooner or later