cycles as the matured economies do. in the matured market economies, due to the obvious cycles in economic growth, the adjustment of interest rate also show a periodic feature, that is, raising the interest rate in one period and cutting the rate in another. the pattern of economic cycles in china is not yet that stable, so it ’ s not appropriate to say that we have entered a certain period. the central bank ’ s decision on raising the interest rate will be based on the close monitoring of the changing economic and financial situation and timely analysis of the development of macroeconomic indices. with regard to the “ negative interest rate ”, we shall understand that interest rate policy is not meant to ensure that the real interest rate is positive at any particular point of time. instead, it depends on various factors. first, the month - on - month cpi in china is significantly affected by seasonal factors. it may be high in one month and much lower in another. as regards the year - on - year cpi, it should not be used as the sole basis for judging whether the real interest rate is at an appropriate level, since the base figure of the same period of the previous year may contain some abnormal factors. therefore, we should base our judgment on careful analysis and forecast. second, the saving rate in china is very high. large amount of savings have been channeled to investment projects, leading to overheating in some sectors. the premier ’ s report on the work of the government pointed out that steps will be taken to boost domestic demand by expanding consumption. high interest rate on deposit will adversely affect the efforts to increase consumer demand. third, investment can be financed by savings through many channels, including the banking system, capital market and direct investment. in china, an excessively large share of financing is made through the banking system, while that made through the capital market and direct funding is relatively low. so the asset - liability ratio or debt to equity ratio of the enterprises is unduly high. we will take measures to promote the funding of investment through channels out of the banking system. in sum, whether the interest rate of deposit is positive or negative is not the only consideration in formulating the interest rate policy. there are various factors that need to be considered in setting an appropriate interest rate level. reporter : on march 16, 2005, the central bank announced its decision to modify the policy on individual housing loans. the new policy prescribes that preferential interest rate is no

with a significant rise in uncertainty. this scenario captured many channels likely to affect the canadian economy, including foreign demand and commodity prices. it also attempted to capture some amplification from elevated household debt. it did not, however, include the effects of any financial turbulence coming from international markets. 6 see c. a. wilkins, “ the age of leverage ” ( remarks to ubc vancouver school of economics and cfa society vancouver, vancouver, british columbia, march 14, 2019 ). - 5is that in times of stress, redemptions of fixed - income etf shares could amplify volatility in the value of these shares and in prices in the underlying corporate bond market. other riskier forms of lending, such as leveraged loans, which are increasingly being packaged into collateralized loan obligations ( clos ), have been growing rapidly too. 7 globally there ’ s about us $ 700 billion of clos outstanding and issuance is strong. the financial engineering behind the structure has been improved since the crisis, but there is still room for concern. for one, the quality of the underlying loans has declined, and many of them lack the usual protections through covenants. the dynamics in an unwind of any of these more complex instruments could look a lot like a case of deja - vu. those in montreal during the financial crisis will remember that complexity of financial engineering and liquidity mismatch were at the heart of more than one problem. the first line of defence against these risks is clearly with people like you in this room — understanding and mitigating your own risks and building contingency plans in case something goes wrong. the bank is stepping up our own monitoring too, especially as it pertains to non - bank financial intermediation, and is leading an initiative to build greater information sharing among federal and provincial regulators. 8, 9 now, how could the trade war create a perfect storm? what i mean by a perfect storm is a combination of an economic downturn and financial stress. an increase in uncertainty or bad trade news could be the trigger. this, in turn, could spark a sharp reversal in risk premiums and lead to a drop in prices for assets, including for houses. creditors would see more defaults, especially from corporations with lower credit ratings. moreover, if enough investors rushed to adjust their portfolios at the same time, liquidity would dry up, amplifying the effects. 10 all of this would find its way to the