, wave 2. notes : the chart, taken from lenza, m. and slacalek, j. ( 2018 ) op. cit, shows the percentage change in mean income across income quintiles in the euro area four quarters after the impact of a quantitative easing shock, which is assumed to correspond to a 30 basis point drop in the spread between a 10 - year sovereign bond and the policy rate. it also shows the decomposition of the change into the extensive margin ( transition from unemployment to employment ) and the intensive margin ( increase in wages ). the numbers in brackets show the initial levels of mean gross household income in each quintile. the statistics cover the euro area, which is modelled here as an aggregate of france, germany, italy, and spain. second, households differ substantially in the size and composition of the assets they own and in their indebtedness ( chart 5 ). based on the second wave of the hfcs almost 60 percent of euro area households are homeowners, of which about a third have a mortgage. almost all households own financial assets, even if their value is typically only a small fraction of the value of their real estate holdings. these dimensions of household heterogeneity clearly matter for the exposure of individual households to monetary policy decisions. chart 5 household assets and debt by income quintile ( x - axis : quintiles and deciles ; y - axis : eur thousands ) sources : de bond, g. et al. ( op. cit ), and household finance and consumption survey, results from the second wave. notes : the chart shows the average value of assets and debt per household across five income quintiles for the euro area. the top quintile is further broken down into two deciles. housing wealth is composed of the households ’ main residence and other real estate. other assets include the value of households ’ vehicles, voluntary pension / life insurance, shares, valuables, bonds, managed accounts and money owed to households. for instance, ecb simulations suggest that unexpectedly - low inflation tends to harm young and middleaged households, and more so for young income - rich households that disproportionately have nominal debt liabilities. by contrast, older households tend to gain from unexpectedly - low inflation, especially if they are incomerich, since this group tends to hold nominal assets. to the extent that their financial assets have short maturities and their mortgages have

of capital ratios during the current crisis. large banks, typically endowed with thin capital buffers, reacted to the downturn by increasing capital procyclically. by contrast, small banks, which entered the crisis with large capital buffers, effectively acted as stabilizers. there is clear evidence of this behaviour for both the us and the european banking systems ( see figure 1 ). 15 the imf has recently analysed the degree of symmetry of map policies, without reaching firm conclusions. in the 36 countries examined, between 2000 and 2011 the cases of policy tightening far outnumbered the episodes of loosening. most of the loosening measures, often consisting in the relaxation of previously tightened instruments, occurred after 2008. the econometric exercise is inconclusive on whether map measures have symmetric or asymmetric effects, but the results have to be interpreted with caution, as the incidence of loosening events may be too small to detect statistically significant differences. 16 3. 3 adjustment of policy tools : speed, size the speed at which policy tools can be adjusted also deserves attention. in the netherlands, a recent decision by the government ( contained in the 2012 stability programme ) forsees a gradual lowering of the maximum ltv ratio from 106 per cent in 2012 to 100 per cent. the decline is expected to take place at a pace of about 1 percentage point per year. as a comparison, in italy the average ltv declined by almost 10 percentage points from 2006 to 2012 – about 1. 6 percentage points per year. this is a much faster adjustment – note that it was not driven by the regulator, but by banks ’ autonomously adopted policies. what is the right adjustment speed? a look at housing market cycles provides insights in this respect. both upturns and downturns in housing cycles in advanced countries last on average around 5 years. 17 this suggests that the tightening pace adopted in the netherlands might be too slow, with risks that the countercyclical policy could be fully effective only at the turning point of the cycle. this is not a criticism ; 18 i just mean to illustrate a general point. my assessment is that our knowledge in this area is particularly poor, and that we must make the most of the empirical evidence that will accumulate from future policy experiments. the speed of adjustment is clearly related to the size of the adjustment. for example, the countercyclical capital buffer will have to be managed taking into account that an increase, say, will affect all banks at