attract lower interest rates. in relation to loan size, this suggests that borrowers with larger loans may have somewhat greater bargaining power. 2. loan - to - valuation ratios and offset balances the securitisation dataset provides us with a measure of the lvr, based on the current loan balance. 8 we refer to this here as the ‘ current lvr ’. this is one indicator of the riskiness of a loan. other things equal, higher lvrs tend to be associated with a greater risk of default ( and greater loss for the lender in the case of default ). 9 graph 4 shows current lvrs for owner - occupiers and investor loans, split into interest - only and principal - and - interest loans. i should emphasise again that the securitisation dataset may not be entirely representative of the set of all mortgages, particularly when it comes to lvrs. that is because high lvr loans may be less likely to be added to a pool of securitised assets in order to ensure that the securitisation achieves a sufficiently high credit rating. 10 with that caveat in mind, we see that there is a large share of both owner - occupier and investor loans with current lvrs between 75 and 80 per cent. that is consistent with banks limiting the share of loans with lvrs ( at origination ) above 80 per cent. also, borrowers have an incentive to avoid the cost of mortgage insurance, which is typically required for loans with lvrs ( at 5 / 13 bis central bankers'speeches origination ) above 80 per cent. comparing investor loans with owner - occupier loans, we can see that investors have a larger share of outstanding loans with current lvrs of 75 per cent or higher. 11 that ’ s most obvious in the case of interest - only loans, but is also true for principal - and - interest loans. this reflects the investor ’ s financial incentive to maximise the amount of funds borrowed ( without breaching the banks ’ threshold above which they require lenders mortgage insurance ). that can be more easily achieved with an interest - only loan. and, even in the case of principal - and - interest loans, investors don ’ t have the same incentives as owner - occupiers to get ahead of their scheduled repayments. but what i ’ ve just shown doesn ’ t account for offset accounts. these have

yannis stournaras : the recent decision of the german constitutional court regarding the public sector purchase programme of the european central bank speech by mr yannis stournaras, governor of the bank of greece, at the online discussion in the think tank “ circle of ideas ”, 12 may 2020. * * * the decision of the german constitutional court questioning the legality of the ecb ’ spublic sector purchase programme — or pspp — has generated a great deal of confusion and concern. the court found that, in launching the pspp in early 2015, the ecb exceeded its mandate ; the court ordered the deutsche bundesbank to stop participating in the execution of the pspp after a transitional period of three months, “ unless the ecb governing council adopts a new decision that demonstrates in a comprehensible and substantiated manner that the monetary policy objectives pursued by the ecb are not disproportionate to the economic and fiscal effects resulting from the programme. ” 1 two essential principles, both of which underpin european cohesiveness and unity, are at stake here. the first principle is a legal one. the german court ’ s ruling effectively challenges a 2018 ruling by the european court of justice that the pspp was legal. which court — the german constitutional court, a national tribunal, or the european court of justice — has primacy in matters relating to european institutions? because the ruling by the german court has created a great deal of uncertainty, the issue of legal primacy needs to be reaffirmed. i will leave it to my very distinguished co - speakers to address this issue from a legal perspective. the second principle concerns the independence of the ecb. it is this principle that i wish to address. in this connection, i will discuss three issues : first, the rationale for central bank independence ; second, the ecb ’ s mandate ; and third, the context of the decision to undertake the pspp. on independence, there are important reasons why the ecb was made an independent central bank on its inception in 1999. numerous studies in the 1980s and the 1990s that compared central bank performance had found that independent central banks — and a prime example was the deutsche bundesbank — performed much better than other central banks. independent central banks delivered lower unemployment and lower inflation than others because they were free from political pressures. independence, however, does not mean an absence of accountability. the ecb may be independent, but