an auction has failed. investors know in advance that the borrowers will be protected by the trigger in a short - lived crisis. this allows investors to focus on the probability of the trigger being activated – rather than on a total market collapse. and the fact that the trigger comes at a price shows that investors are aware of the possibility of maturity extension. seen from danmarks nationalbank ’ s perspective, the act on maturity extension has served its purpose. a robust mechanism has been introduced for handling the mortgage banks ’ bis central bankers ’ speeches refinancing risk – also in the event of resolution. the probability that the tail risks would materialise was very small, but the potential implications were huge. after the introduction of the legislation on maturity extension, it has been discussed whether the legislative amendment could have an impact on competition between banks and mortgage banks. one could get the impression that the mortgage banks wish to use legislation to protect them - selves from competition by restricting competitors. the same applies in relation to the forthcoming supervisory diamond. that is not how these initiatives should be viewed. on the contrary, competition in the market for home loans is healthy – and so is the arrival of new players on the market. banking and mortgage banking are based on two separate business models. a bank has many different sources of funding. a mortgage bank relies wholly on issuance of mortgage bonds to finance its lending. a bank lends money for many different purposes – with and without collateral. a mortgage bank solely provides collateralised loans for purchase of property. a bank takes on many different types of risk. a mortgage bank practically only takes on credit risk. i can see absolutely no reason why two so different business models should be subject to exactly the same regulation. if a mortgage bank wants to have the same opportunities as a bank, it must obtain a banking licence. in relation to competition between banks and mortgage banks, it should also be kept in mind that a certain shift in market shares over time does not necessarily indicate unequal terms of competition. since 2008, there has been a tendency for lending by mortgage banks to grow, while lending by banks has been declining. it is a natural tendency during times of crisis that it is advantageous to raise loans against real property as collateral via a simple, transparent model such as the danish mortgage credit model. but do not be surprised if some of the loans start flowing back to the banks ’ balance sheets in the coming years. the banks ’ loans are tailored to the individual customer ’

non - bank counterparties of gsibs to trade with the bis central bankers ’ speeches gsibs on terms equivalent to those found in the isda resolution stay protocol. this further step is needed in order to limit the potential for arbitrage within the market and to promote greater stability in the event of a necessary resolution. as we move this work forward, we should acknowledge and take stock of the significant advances achieved over the past few years, while at the same time remain focused on our responsibility to address the challenges that remain. thank you for your kind attention. bis central bankers ’ speeches