##preciation is re - directed to freely floating currencies. as well, the stock - flow problem of investors looking to rebalance portfolios towards emerging markets could lead them to invest in proxies such as australia and canada. finally, the desire of major reserve holders to diversify their portfolios provides additional support. with financial market participants trying to ride these trends, volatility could become excessive. brics refers to brazil, russia, india, china and south africa. all else being equal, the imf estimates that a 10 per cent increase in oil prices, reduces u. s. growth by about 0. 2 to 0. 4 per cent. bis central bankers ’ speeches the imperative of macro stability in this environment, domestic macro stability is paramount. sustained fiscal adjustment is now required in most advanced economies. debt - to - gdp in g - 7 countries is now the highest since the second world war. the age of austerity is not a slogan but a timetable. the task is enormous ( chart 7 ). stabilizing debt will require increases in the primary balances of between 8 and 11 per cent of gdp for the united states, the united kingdom and spain. moreover, these forecasts assume that nominal interest rates will be roughly the same level as nominal growth rates. however, if markets begin to lose patience, higher rates will ensue and the required adjustment will be even larger. 10 canada is one of the few advanced economies on a path to avoid this outcome. however, despite this crucial advantage, we cannot fully insulate ourselves from the spillovers from others. fiscal slippage by some major countries may increase interest rates for all. moreover, experience suggests that when debt exceeds 90 per cent of gdp ( as it will for most of our trading partners ), growth slows, with predictable consequences for our exports. 11 in the extreme, if fiscal consolidation abroad is delayed too long, investors may even call into question the existence of a risk - free asset. this would have far - reaching consequences, including less - diversified portfolios, higher risk premia across asset classes and greater asset market volatility. 12 the resulting higher borrowing costs for individuals and firms would have broad - based implications for capital allocation and economic growth. 13 in the end, given these risks, all countries should follow the toronto g - 20 accord to halve their deficits by 2013 and stabilize their respective debt - to - gdp ratios by 2016. implications for monetary policy in canada

. banks have also deferred both principal and interest payments on over 2, 100 renovation and education loans. more than 6, 200 applications to convert outstanding credit card and unsecured debt to term loans at lower interest rates have been approved. over 3, 200 motor vehicle loans and hire - purchase agreements have benefitted from a variety of repayment reliefs. 7 / 15 bis central bankers'speeches banks and finance companies have also been providing repayment relief to smes for their secured loans. more than 5, 300 smes ’ secured loans now enjoy repayment deferments. beyond the relief package, banks have allowed some of their sme customers to defer repayment on their unsecured loans as well. insurance companies have been providing reliefs for individuals and smes with difficulty paying their insurance premiums. more than 25, 000 life and health insurance policies now enjoy a six month premium deferral while maintaining coverage. close to 600 individual general insurance policies, such as for vehicles, are under flexible instalment payment plans to help ease policyholders ’ cash flow burden. more than 240 sme applications for flexible instalment plans for general insurance have also been approved. these various relief measures have meaningfully helped to ease the cashflow pressures faced by individuals and smes. but deferred payments provide only temporary relief and come with longer term costs. bank loans and insurance policy premiums will eventually have to be paid. deferment incurs interest cost, which means larger outstanding balances at the end of the deferment period. mas is actively discussing with the banks, finance companies, and insurers on how to ease borrowers and policyholders into gradually resuming repayments, when the relief measures expire towards the end of the year. we want to avoid “ cliff effects ” of a sudden withdrawal of these reliefs. the pace of resuming repayments needs to balance between two things : the cash flow situation of the borrowers ; and the accumulation of more debt which could increase the risk of default further down the road. regulatory reliefs for financial institutions mas has provided regulatory reliefs to financial institutions to enable them to continue supporting the economy without undermining their safety and soundness. to support banks ’ capacity to lend, mas has implemented transitional measures till endseptember 2021 : allowing banks to recognise 100 % of regulatory loss allowance reserves as tier 2 capital ; and reducing from 50 % to 25 % the amount of stable funding that banks must maintain on loans