, and later it turned out that some banks had eased their credit conditions far too much. so a rise in lending is not immediately on the cards. credit institutions operating in such a market should be particularly thorough when assessing potential borrowers. this includes taking into account the fact that house prices can fluctuate considerably. when the housing bubble of the 2000s burst, it became clear that a maximum ltv ratio of 80 per cent for mortgage loans does not necessarily ensure that the value of the home exceeds the value of the mortgage loan when prices fall. if we look at the mortgage statistics, we can see that lending is increasing most strongly in the urban areas, which is hardly surprising as this is where the largest house price rises are seen. demand for loans is also highest in these areas. but new loans are also being granted in rural areas, and the number of municipalities where extraordinary prepayments are exceeding new lending is very small. this indicates that if there is sufficient collateral to mortgage, loans are granted. no matter where the property is located. the challenge of declining populations in some areas is not solved by granting more credit. * * * turning to monetary policy, the beginning of the year was unusually eventful. following the decision by the swiss national bank on 15 january to discontinue the minimum exchange rate for the swiss franc against the euro, we saw an unprecedented increase in demand for danish kroner. against that background, danmarks nationalbank took a number of unusual steps. we intervened in the foreign exchange market by selling kroner for a larger amount than ever before in our history, and the benchmark monetary policy interest rate – the rate of interest on certificates of deposit – was reduced to – 0. 75 per cent. on the recommendation of danmarks nationalbank, the ministry of finance also suspended issuance of danish government bonds temporarily, and finally an extraordinary increase of the limit on the monetary policy counterparties ’ current account deposits at danmarks nationalbank was introduced. these measures had the desired effect. the krone remained stable close to its central rate, and towards the end of february the inflow of foreign exchange ceased. in recent months, the situation in relation to the krone has gradually normalised, and danmarks nationalbank has sold foreign exchange in the market for a considerable amount. on the recommendation of danmarks nationalbank, the ministry of finance has therefore decided to resume issuance of government bonds effective from october 2015. at the same time, the

of interest rates is weakened, firms can nonetheless take action in pursuit of higher productivity. likewise, even if the signaling effects are weakened, it is possible to make appropriate judgments on such factors as the future state of economic activity and prices and the government's fiscal condition, based on various information other than developments in long - term yields. finance only plays a behind - thescenes role in the economy, providing funds like a flow of blood - - firms, the government, and other economic entities are the economy's principle drivers. in a state without meaningful interest rates or no positive interest rates, however, the functions interest rates ought to fulfill have been weakened, and this should be fully recognized. c. toward the normalization of monetary policy i have said that the bank has taken its first step toward the normalization of monetary policy. so, what does the normalization look like? in my view, the ultimate goal is, with the price stability target of 2 percent, to return interest rates to a level where they can perform their functions - - that is, where raising or lowering interest rates can act to adjust demand and affect prices - - and at the same time to recover the hurdle rate function and signaling effects i mentioned earlier. although the bank has changed its monetary policy framework, the state without meaningful short - term interest rates i spoke about earlier has not changed, and long - term interest rates have not reached the point where they are entirely determined by market. consequently, even though the bank has taken its first step and the situation will be better than it has been, the kind of side effects i mentioned earlier seems to remain. i believe that it is crucial for the bank to steer future policy conduct in order to proceed deliberately but steadily with monetary policy normalization and thereby successfully unwind the unprecedented large - scale monetary easing, with the fundamental premise that the bank will do so in response to developments in economic activity and prices as well as financial conditions. thank you.