advocated at the monetary policy meetings. the riksbank ( 2013c ). a central element of uncertainty is how the repo rate affects the degree of household indebtedness. the riksbank ’ s estimates imply that the debt ratio will increase when the repo rate is cut, but that the increase will be small. svensson ( 2013b ) says on the other hand that a lower repo rate would entail a lower debt ratio. but in his model there is no real reason to be concerned over household indebtedness, regardless of how the repo rate affects the degree of household indebtedness. for example, he does not allow for households ’ interestrate expectations becoming unjustifiably low if the repo rate is cut. bis central bankers ’ speeches supervisory measures can have direct effects on financial risks and imbalances by limiting the possibilities of particularly vulnerable households, companies or banks to take certain decisions. however, the measures may also have indirect effects on risks and imbalances, or side effects on the economy by affecting the cost of capital or the general demand situation. an example of a measure that probably first and foremost has direct effects is the mortgage cap. this affects primarily a small group of highly - indebted households and can be expected to contribute substantially to preventing financial imbalances arising. but the mortgage cap scarcely has any major effects on the general demand in the economy, or on the cost of capital for a typical household. an example of a measure that can affect the cost of capital is higher risk weights on mortgages. such a measure would probably lead to an increase in mortgage rates in relation to other lending rates. and higher risk weights would probably also push up average lending rates at a given repo rate, at least in the short run. as i in practice have not let concern for households ’ rapid build - up of debt affect my view of how the repo rate should be set today, measures of the first type, that is, measures that directly limit vulnerable households ’ opportunities to become or remain heavily indebted, would probably also have little effect on my choice of repo rate and repo - rate path. on the other hand, measures that entail an increase in the average lending rates or a weakening of general demand would justify cutting the repo rate. the purpose would then be to counteract the effects of the supervisory measure on total economic developments. however, the supervision measures could nevertheless affect financial im

##prudential policy, can be inefficient and may lead to more volatility as investors engage in regulatory arbitrage roengpitya and rungcharoenkitkul ( 2009 ) “ measuring systemic risk and financial linkages in the thai banking system ”, bank of thailand discussion paper. across different economies. to address this dimension of the challenge, a more coordinated approach to macroprudential measures may be needed. although steps towards formal coordination have yet to be established, ongoing close cooperation amongst regional economies has already resulted in a number of common platforms through which greater policy coordination can be conducted. for example, the asean + 3 macroeconomic research office ( amro ) to be launched next year is already mandated to conduct economic and financial surveillance across the region. the office will be in a good position to study this type of policy coordination. in the meantime, more discussion among policy makers in the region should be encouraged, as we increasingly are facing common problems that are of a global nature. to this end, i would like to commend bank indonesia for organizing this international conference, which contributes tremendously to the region ’ s discussion and efforts along this line. it is on this note that i would like to end my remark. thank you.