are blended with a heloc component. helocs have been a very convenient tool for many households. they give borrowers flexibility to finance renovation projects or handle emergencies — such as when your furnace dies on a cold february night. their popularity shows how useful these lending arrangements are. however, there are some potential risks that borrowers need to manage. helocs usually allow the borrower to pay only the interest on the loan each month, leaving the principal amount unchanged. indeed, about 40 per cent of heloc borrowers are not regularly paying down their principal, which means that debt loads may persist longer than in the past. furthermore, some may be using their heloc to speculate — for example, to fund a down payment on a second house with the intention of flipping it. given the potential for volatility in house prices and for higher interest rates, such activity may be adding to the overall vulnerability of the system. we have seen several rounds of macroprudential measures to tighten mortgage finance rules. these include measures last year that were aimed at high - ratio mortgages — those where the down payment is less than 20 per cent of the value of the home. since then, there has been a sharp drop in the number of highly indebted canadians obtaining these mortgages — and by highly - indebted we have in mind people with a ratio of debt to income that is more than 450 per cent. but we have also seen an increase in low - ratio mortgages with risky characteristics, such as extended amortization periods. new lending guidelines for low - ratio mortgages, which will come into effect next year, should work to limit the number of low - ratio mortgages going to highly indebted households. these mortgage rule changes will help build up the resilience of the financial system over time, as each new mortgage will be stress - tested to ensure that the borrower can manage a higher interest rate at renewal time. it is important to remember that the purpose of these rule changes is not to control house prices. ultimately, the laws of supply and demand will determine the direction of house prices. at the same time, there is little doubt that these rule changes will mean less growth in our housing sector. in the wake of the global financial crisis, ultra - low interest rates have helped our economies weather the storm, but an important by - product has been exceptional growth in housing. for some time now we have been expecting a rotation

##s of capacity have two elements — more capital equipment, and more people. attracting the right people to new jobs may require higher wages, and this in turn can cause people to re - enter the workforce. we may be seeing early signs of this happening. i mentioned earlier that measures of wages have turned higher over the past couple of months and, in november, the participation rate for young people jumped back to more than 64 per cent. these are encouraging signs, but it will take awhile before they become trends. 4 / 6 bis central bankers'speeches the bank is watching these indicators very carefully at the moment, for they will help us manage the risks that monetary policy faces at this point in the business cycle. our current policy setting clearly remains quite stimulative. with the economy operating near potential, a mechanical approach to policy would suggest that monetary policy should already be less stimulative. however, as we said in last week ’ s interest rate announcement, we still see signs of ongoing, albeit diminishing, slack in the labour market. fundamentally, this is an exercise in risk management. the facts that the economy is operating near its capacity, and that growth is forecast to continue to run above potential, together pose an upside risk to our inflation forecast. at the same time, our belief that there remains some slack in the labour market poses a downside risk to our inflation forecast. given the unusual factors at play, the bank is monitoring these risks in real time — the term we use for this is “ data dependent ” — rather than taking a mechanical approach to policy setting. and one more thing … so there we have it, three preoccupations that are keeping me awake at night. i could give you even more, but these are my top three, and you do not have all afternoon. actually, there is one more thing keeping me awake at night, which perhaps i should mention, and that is all the noise i keep hearing about cryptocurrencies, especially bitcoin. there is a lot of hype around bitcoin, and markets are evolving quickly to allow wider access, including to retail investors. so perhaps you will allow me to make a couple of points. to begin with basics, the term “ cryptocurrency ” is a misnomer — “ crypto, ” yes, but “ currency, ” no. for something to be considered a currency, it must act as a reliable store of value, and you