panayotis thomopoulos : recent developments in housing finance speech by mr panayotis thomopoulos, deputy governor of the bank of greece, at the european finance convention, athens, 31 january 2007. * * * ladies and gentlemen, it is a great pleasure and an honor to address such a distinguished audience of practitioners in the area of finance on such a topical issue. before speaking succinctly on the housing market and its interlinkages with the rest of economy, i would like to say a few words about long term issues and challenges. in particular in the field of mortgage lending the effects of today ’ s decisions will be felt during the next 25 or even 35 years, when the last installment of a 25 or 35 - year loan is repaid. today most analysts and market actors seem optimistic about future developments and this because markets are mainly preoccupied with the short term, and tend to project current trends into the future. and if you want to lengthen the time horizon, many analysts, traders etc. will cite the famous words of j. m. keynes, “ over the long run we are all dead ”, thus bringing the discussion back to current developments and a focus on the short - term. indeed reading the figures and short - term forecasts about the world economy presented by the oecd, imf and others one cannot but be optimistic. the global economy has been growing at an average rate of almost 5 % since 2001, and the short - term prospects point to a continuing high rate of growth. the world has not seen such a high long - term rate of growth since the 1950s and 1960s. moreover, whereas in the past only a small proportion of the world population ( 1 / 4 ) were reaping the dividends of growth, nowadays nations accounting for almost ¾ of the word population are benefiting from rising standards of living, though to varying degrees. are these revolutionary developments and do they signal a new area of the world history? i believe the answer is yes and yes. the developed world, that is essentially eu, us & cnd, australia, n. zealand, japan & korea, are no longer the only global actors, and the consequences of the economic upheavals are being felt in the world political arena, cultural attitudes, social behaviour and unfortunately the climate across the globe. every year more than 50 - 60 million people from emerging market countries, essentially in china and india, are entering the market economy, both as consumers and

be corrected sooner or later. the current account deficits observed in many countries in the region raise concerns regarding their sustainability. any loss of confidence on the external side may easily cause some upheaval in the domestic financial market. countries in south - eastern europe have the advantage of being able to learn from best practices developed in more advanced countries and avoid the mistakes of others. they should take the opportunity offered now by a relatively stable international environment and their domestic fast growth to put mortgage lending on a stable footing. the credit information infrastructure should be strengthened, the legal procedures for dealing with defaults should be simple, clear and transparent, and both banks and borrowers should realize the risks they take, especially as they move to more sophisticated instruments.