is important to note that tax relief on mortgage payments have been phased out since the crisis, and a recurrent property tax has been introduced, in ireland. 6. conclusion economies that experienced boom - bust cycles in housing, such as croatia and ireland, suffered disproportionately in the financial crisis. there were numerous reasons for this large impact, many of which are, by now, very familiar. however, it is less frequently noted that those economies with deeper rental markets suffered less. while the specifics of housing policy are outside the remit of central banks, it is incumbent for us to draw attention to issues that relate to financial stability. to reduce the risk and the amplitude of future housing cycles, housing policy needs to consider also financial stability issues. in this regard, it seems particularly important to promote a well - developed rental market as a genuine alternative to ownership, and an attractive investment proposition for potential landlords. while many households may continue to buy rather than rent, we need to make sure that this choice reflects their preferences and does not merely reflect a poorly functioning rental market. references ball, l., ( 2014 ) “ long - term damage from the great recession in oecd countries ”, nber working paper 20185. for more information, see : http : / / www. citizensinformation. ie / en / social _ welfare / social _ welfare _ payments / supplementary _ welfare _ schemes / rent _ supplement. html. oecd ( 2011 ). bis central bankers ’ speeches belsky, e. s., ( 2013 ) “ the dream lives on : the future of homeownership in america ”, joint center for housing studies, harvard university, w13 – 1, january. conefrey, t. and smith, r., ( 2014 ) “ on the slide? salary scales for new graduates 2004 – 2012 ”, central bank of ireland, economic letter no. 1. de boer, r. and r. bitetti, ( 2014 ), “ a revival of the private rental sector of the housing market? : lessons from germany, finland, the czech republic and the netherlands ”, oecd economics department working papers, no. 1170. ecb, ( 2009 ), “ housing finance in the euro area ”, structural issues report, march. housing agency, ( 2014 ) “ future of the private rented sector, final report ”, prepared for the housing agency on behalf of the prtb, october

ensure that there are effective mechanisms to ensure that these criteria are sustained. the growth and stability pact failed because there was no real sanction involved for countries that transgressed the rules. this points to the need for a single fiscal authority. while this was previously recognised, the political difficulties of achieving agreement on this, and to allow politically sensitive issues such as tax policies, expenditure requirements, and fiscal transfers to be made by a supranational body, would have significantly delayed or even perhaps stymied the implementation of the single currency. it is increasingly apparent that a further weakness in the design of the eurozone was the lack of a lender of last resort. while in principle the ecb can, and has been in bis central bankers ’ speeches effect playing this role and taking a large amount of risky assets onto its balance sheet, it is questionable whether it can continue to do so without intense political pressure from some of the member states who feel that the ecb is operating outside of its mandate. at present it is the individual central banks that stand behind the ecb. there is no unified fiscal authority that guarantees its activities. it would be wrong to think that sorting out the fiscal issues would have prevented the crisis. these issues are a manifestation of a deeper problem of divergent levels of competitiveness. the underlying assumption of a monetary union is that competitiveness will remain constant, i. e. the internal real exchange rates will be unchanged. in the past ten years the peripheral countries have lost competitiveness to varying degrees, in the case of greece by about 30 per cent. there is no internal mechanism to prevent this, and in fact the single currency allowed for automatic and continuous financing of these divergent trends at low rates of interest. italy ’ s problem is not only fiscal in nature. italy is after all running a primary surplus. in the absence of an exchange rate adjustment mechanism, the only way to adjust is through an internal devaluation, implying falling nominal and real wages, and fiscal austerity. this is the classic expenditure reduction case under fixed exchange rates. the inability to change the nominal exchange rate imposes severe adjustment costs. while exchange rate flexibility would ease the burden of adjustment, countries that find themselves with appreciating currencies in response to developments elsewhere find it extremely uncomfortable as well. countries with stable macroeconomic environments are better placed to shield themselves, but it is almost a truism that no country can actually escape the fall out of the global