the superintendent of financial institutions announced enhanced guidelines for low - ratio mortgages that are similar to the changes announced for mortgage insurance last autumn. there will be restrictions on borrowing from multiple sources to finance a purchase, and borrowers will have to show that they could handle higher interest rates. that is just good practice for anybody who is taking on new debt. while we can be confident that the new rules will help mitigate this vulnerability, their precise impact will depend on how both borrowers and lenders respond. we will be watching this closely when the guidelines come into effect next year. another important development since june is the bank ’ s tightening of monetary policy through two interest - rate increases, which came in the context of improving economic fundamentals. the effect of these moves on mortgages is complex. roughly 15 per cent of borrowers have floatingrate mortgages, and they felt the impact immediately. however, interest rates on fixed - rate mortgages only change when they are renewed, and about half of all mortgages will not reset for more than a year. some of those that will reset next year could even see their interest rate decline, depending on their term. improvements in the labour market, particularly stronger wage 1 / 2 bis central bankers'speeches growth, should help households adjust to higher interest rates. but clearly, this is another area we will watch closely. the second vulnerability, imbalances in the housing market, has also been affected by recent changes in government policy. price growth has slowed in the greater toronto area after the ontario government introduced policies aimed at housing affordability. this slowing pulled down national house price growth to an annual rate of 10 per cent. the toronto - area market is following a pattern similar to what took place in the greater vancouver area last year, where resales fell sharply and new listings rose after the b. c. government announced a tax on non - resident buying. it is worth noting that prices in the vancouver area are once again growing more quickly than the national average. the bank will continue to monitor housing market imbalances closely, particularly for signs of extrapolative expectations. higher interest rates and stricter mortgage - finance rules should also help mitigate this vulnerability. however, the economic fundamentals of the canadian housing market remain strong. demand is being supported by increases in employment and population, and supply is being held back by basic geography and restrictions on land use. the third vulnerability i will quickly mention is related to cyber security. there has been a worldwide

compared to standard business ( real ) cycles. credit and asset price cycles may take long to develop their potential to destabilize the financial system. further on, such a potential may emerge regardless of watchful micro - prudential supervision or stable inflation. the resulting notion of systemic risk may be identified as the interplay of macroeconomic shocks that make financial sector vulnerable, the contagion resulting from financial interconnectedness and endogenous financial imbalances associated with credit booms, credit leverage and risk taking behaviour of financial institutions 3. second, there are still no mechanisms in place to engineer sustainable synchronisation of cyclical movements across europe. the question of cyclical synchronisation arises as particularly important within the international setting. this is the factor that makes policy responses even more complex, especially within a currency union such as the euro area, where the damage of suboptimal policy responses might exceed mere fiscal costs and output losses – they may threaten the future of the euro itself. due to the recent events, therefore, researchers have focused their attention on testing for the endogeneity of optimal currency areas, further enriching the vast literature on the synchronisation of business cycles 4. this literature substantiates the conclusion of diverging real and financial cycles across member states, both during the pre - emu and post - emu regimes. the single monetary policy has not d. miles, monetary policy and forward guidance in the uk, speech given at the northumbria university, newcastle, 2013, d. kapp, m. vega, real output costs of financial crises : a loss distribution approach, mpra paper no. 38988., 2012, a. g. haldane, the $ 100 billion question, comment by andrew g. haldane, financial stability, bank of england, institute of regulation & risk, hong kong, bis review 40 / 2010. constancio, v. ( 2015 ) : financial stability risks, monetary policy and the need for macro - prudential policy ; speech at the warwick economics summit, 13 february 2015 ( https : / / www. ecb. europa. eu / press / key / date / 2015 / html / sp150213. en. html ). grigora, v., stanciu, i. e. ( 2015 ) : new evidence on the synchronization of business cycles : is there an european business cycle