, bonds, stocks and mutual funds held outside a group pension plan. the financial buffers held by less - indebted households are equivalent to about 26 months of debt payments. see cateau, roberts and zhou ( 2015 ). the simulation was conducted using our household risk assessment model ( hram ). for further details on hram, see u. faruqui, x. liu and t. roberts, “ an improved framework for assessing the risks arising from elevated household debt, ” bank of canada, financial system review, ( june 2012 ) : 51 - 57. see international monetary fund “ canada : financial sector stability assessment, ” imf country report no. 14 / 29, february 2014 historically, this increase in household arrears is significant. arrears are defined as the percentage of consumer loans by dollar value held at chartered banks that are currently 90 days or more behind in payments. for example, during the global financial crisis the rate of households in arrears in canada only rose from 0. 30 per cent in the first quarter of 2008 to 0. 65 per cent in the first quarter of 2010. given the regulatory regime in place at the time, this doubling in the arrears represented less than 5 per cent of tier one capital held by canada ’ s chartered banks. clearly, a larger increase in arrears would have a much greater impact on the banks ’ capital. bis central bankers ’ speeches what would be the impact on the financial system and economy? what would be the possible implications for the financial system if the vulnerability arising from highly indebted households were triggered? the rise in household arrears could force some vulnerable homeowners to sell their homes or eventually default on their mortgages and other consumer debt. 18 if defaults rose quickly or if many households were forced to sell their homes, house prices could drop sharply across canada, particularly in vancouver and toronto, which have recently experienced exceptionally strong price growth. a broad - based decline in house prices would, in turn, have large direct effects on canadian lenders and mortgage insurers. results from stress tests show, however, that there are sufficient buffers in the financial system to withstand such a scenario. 19 for example, the six largest canadian banks, which hold roughly 70 per cent of outstanding mortgages, have increased the quantity and quality of their capital in recent years and are well diversified across regions and sectors. in addition, most of the mortgages they hold are supported by government

the direct and indirect effects of prices will impede returning the inflation indicator to the goal declared by the eurosystem, i. e. under 2 %, but close to that figure. the extraordinary monetary policy measures implemented by eurosystem continue to be an important factor stabilizing the euro area. the conditions for borrowing have become more favourable both for enterprises and households. the dynamic of loans granted in the euro area continues to improve, yet the speed of recovery is low. therefore, at the 3 december meeting of the ecb council we decided on several measures : • to further reduce the overnight deposit facility interest rate to minus 0. 30 % ; • to extend the expanded asset purchase programme to the end of march 2017 ; • to reinvest the principal amounts of the securities purchased within the expanded asset purchase programme once their term of maturity has set in ; • to include amongst the purchasable assets also secure, investment grade debt securities emitted by local governments ; bis central bankers ’ speeches • to continue to conduct refinancing operations with a set interest rate and full allotment at least to the end of the last reserve requirement period of 2017. the decision taken by the ecb council will mean even cheaper resources at the disposal of latvian commercial banks, households and enterprises. i hope that this loan money will reach households and businesses without an additional surcharge. the costs of servicing the latvian government debt will also continue to drop, which will mean additional savings – and it would be essential not to consume those but to direct them toward implementing structural reforms, thus increasing the country ’ s competitiveness. instead of additional borrowing to make use of the low interest rates, it is important to reduce the public debt, which would have a positive impact on the budget as well. but i will turn to that in a little while. ( chart ) latvijas banka has continued with the expanded asset purchase programme by purchasing securities emitted by the government of latvian and international organizations in the amount of 1. 44 billion euro over eight months of this year. the purchases of latvian government securities by latvijas banka and ecb had reached 630 million euro by the end of october. 2. and now let ’ s turn to latvian economic growth analyses by sector and other criteria indicate that the latvian economy is growing in accordance with earlier predictions and the rate of this growth could be characterized as moderate. given the complicated situation in the external environment, such a result can be considered as satisfactory