ons, and bank calculations. transactions x 15 - year house price change / mortgage debt, scaled growth in mortgage debt sources : hm revenue and customs ( hmrc ) transactions, ons, land registry, bank of england, and bank calculations. the blue line in chart 10 plots a very crude proxy for this automatic, pre - determined part of mortgage growth. it ’ s just the change in the average house price over the previous fifteen years ( a period designed broadly to match the average tenure of owner - occupiers ) multiplied by the number of housing transactions and then divided by the existing stock of mortgage debt. this is a pretty good match for the real thing ( the red line ). it explains the strength of mortgage growth after the jump in house prices in the years around the millennium. it accounts for the drop in mortgage growth almost to zero after the crisis, largely as the result of a sharp fall in the flow of transactions. it also suggests that, after a long period of relatively subdued growth in the purchase price of housing – since 2004 the average rate of increase has been 3 % a year – we can expect the same for mortgage debt over the next few years. i say “ pre - determined ” but there are obviously risks to any such forecast. one is higher loan - to - value ratios on new mortgages ( ltvs ), a sign of looser supply. in the late 1980s boom the median ltv averaged over 85 %, even as prices rose very rapidly ( chart 11 ). ltvs have been much lower since the early 2000s and, as far as the future is concerned, i ’ d note that, in 2014, the fpc put in place restrictions on the share of new mortgage lending banks could make at high loan - to - income ( lti ) ratios. against this backdrop, the chances of any material rise in the average ltv on new mortgages are low. all speeches are available online at www. bankofengland. co. uk / speeches chart 11 : ltvs high in late 1980s, lower today percentage points per cent ltv on new mortgage loans chart 12 : the rental / gilt yield spread has been a good predictor of house price inflation average per cent sources : uk finance regulated mortgage survey and bank of england. - 4 rental yield spread over government bonds ( lhs ) average house price growth over the following five years ( rhs ) - 8 - 12 - 16 - 2 1987 1992 1997 2002 2007 2012

, and our plans are being implemented on track. these are financial sector master plan phase ii for banking sector, the capital market development plan, the payment road map. our capital account liberalization plan is undergoing industrial hearing. these forces will shape the demand for financial services and supporting infrastructure going forward. the key outcome would be demand for broader set of financial products and services to serve regional cross - border trade and investment. the economic growth and growth of wealth in asia will require better wealth management services. so, we have come full circle. the simple banking model that has served asia well so far will not be adequate to serve our growing future needs. so our banks will have more products, more complex risk profile, more interconnected with global capital market, more reliance on it infrastructure. the regulations being discussed at basel and fsb will become increasingly relevant to us. bis central bankers ’ speeches to go forward, we need to create a trust in risk management system and supervision, not just in our country but also our neighbors in asia. having a global standard is a help in fostering this trust, if we and our neighbors adopt the same standard. the challenge also is that we also need to make the standard appropriate for us. to do this, both banks and regulators across the region need to work together. this symbiotic relationship is how we get the trust and healthy dose of skepticism to keep our financial system safe and efficient. thank you. bis central bankers ’ speeches