/ 4 bis central bankers'speeches to conclude, macroprudential policy is – so to say – approaching its adolescence, and countries will continue to fine - tune their frameworks and instruments. however, experience with applying these tools is growing. i am confident that through knowledge - sharing and international cooperation, macroprudential policy will play an increasingly important role in safeguarding financial stability – in all parts of the world. 1 imf ( 2018 ), the imf ’ s annual macroprudential policy survey — objectives, design, and country responses. 2 milton friedman ’ s famous line ran : “ we are all keynesians now ". 3 net foreign exchange position is defined as the difference between assets and liabilities in a foreign currency. 4 all member states but one ( italy ) now have a dedicated macroprudential authority in place. in italy, the role of setting macroprudential measures ( available in the common eu regulation ) is currently carried out by the bank of italy. 5 the crr / crd iv rules provide for the common regulatory framework for macroprudential supervision. 4 / 4 bis central bankers'speeches

, and issues recommendations or warnings – for all eu member states and eu institutions. dear colleagues, we have talked about international and european perspectives. but final decisions on macroprudential policy are taken at the national level. this is where instruments are calibrated and adopted to country - specific circumstances. macroprudential policy - making is still a rather novel exercise : one can say that every country engages in a sort of experiment to find the right medicine. in lithuania, the central bank became the macroprudential authority in 2014. indeed, it is a very important mandate. lithuania does not have domestically orientated monetary policy as we have been part of the eurosystem since 2015. for that reason, proactive use of macroprudential measures has become the main roadblock against the build - up of cyclical systemic risks in the country ’ s financial system. unfortunately, we did not have such safeguards 10 years ago, when we were hit particularly hard by the boom - and - bust cycle. house prices dropped sharply – by 30 % in 2009, which was the second - worst drop in the whole eu. i think this taught us a lesson. in the post - crisis years, lithuania has been eager to find an 2 / 4 bis central bankers'speeches effective combination of macroprudential policy measures. in 2011, we were among the first in the eu to establish restrictions on loan - to - value, debt - service - to - income, and loan maturity. i have to say that, in introducing those measures in 2011, we did so without having a clear legal mandate. we introduced them by using secondary legislation, based on general provisions under the law governing the functioning of the bank of lithuania. as i mentioned, we only received a clear legal mandate for implementing macroprudential policy three years later. from a legal point of view, the step we took in 2011 was a risky one, but nobody challenged it – perhaps due to the still - recent memories of the 2008 – 2009 crisis. going further, in 2015, to promote responsible lending in a low interest rate environment, we introduced a limit on debt - service - to - income, while also introducing an interest rate shock element. at the same time, loan maturity limit was reduced. taken together, this is one of the largest sets of borrower - based measures in the eu. it has created a reliable backstop against the deterioration of lending standards. combining different instruments helps prevent evasion, targets