to a small degree. since 2004 the propensity to consume has shown an increase equivalent to approximately kr. 15 billion, while housing wealth has risen by kr. 670 billion. it is true that the capital gains have been further mortgaged, but the proceeds have mainly been used for home improvements or pension contributions, or invested in other financial assets. for more than 200 years we have had a secure mortgage financing system with a large, standardised mortgage - credit bond market that has given borrowers access on equal terms to finance real property at long - term interest rates in the capital market. however, in recent times the mortgage - credit system has undergone many changes : mortgage credit no longer comprises associations of borrowers, with members holding joint and several liability that join forces to gain access to a less developed capital market. today, the players are profit - maximising limited - liability companies in an economy with well - developed capital markets. mortgage - credit institutes and banks have become more closely connected in different ways. credit institutions from other eu member states can compete freely in denmark, and danish credit institutions have become active in financing real property abroad. finally, there has been considerable development of new products – for example adjustable - rate loans, capped adjustable - rate loans and deferred - amortisation loans. in this way, mortgage credit has become a product like other commercial financial products in an open economy with a mature financial system. this dynamic has not changed danmarks nationalbank's fundamental perception of the mortgagecredit system. danmarks nationalbank has always found it to be a secure system, beneficial for borrowers, lenders, the capital market, and financial stability. now a new type of covered bonds enters the market, called sdos. at the last annual meeting i called for a thorough review of the future regulations for use of sdos. i would like to acknowledge that this review has been undertaken, and there is now political agreement on a new act on sdos. overall, i believe this to be a good result. the bill also makes it possible for the mortgage - credit institutes to provide mortgage credit financed by issuing bonds in exactly the same way as today. danmarks nationalbank has considered this to be important. for some years the banks have competed with the mortgage - credit institutes to offer mortgage credit, among other things by introducing their mortgage loans. in addition, they also increasingly compete with foreign credit institutions – both in denmark and abroad. now the banks will have the

providers. that makes public trust an asset of great value for the banking sector at this juncture. 3rd challenge : forward looking risk management the third challenge i would like to mention, and which i think applies equally to you as banks as to us supervisors, is to cultivate our capability to look ahead. to sharpen our receptiveness to developments around us. what do i mean by that? let me explain. today, the risk of climate change and the transition to a sustainable economy is on the way to become a permanent element in risk management. who thought that possible only ten years ago? the same goes for cybercrime. this subject was barely mentioned in risk management twenty years ago, but now it is one of the main risks and banks are investing large sums of money to protect themselves against these risks. of course, banks and supervisors are continuously assessing the top risks for the financial sector. banks have made large investments in top notch quantitative models that try to gauge the magnitude of risks. although this does sharpen our focus, and is undoubtedly important, we must not allow it to cloud our intuition, the propensity we have for being alert to ‘ unknown unknowns ’, the dark matter of the financial universe. it was ten years ago that several dangerous developments collided in an explosive cocktail that saw the financial system on the brink of collapse. what will be the toxic ingredients of tomorrow? perhaps the most important aspect of forward - looking risk management and supervision is the recognition that there are certain risks and dangers that will escape our attention, even when they are in plain view. that is why we have capital requirements. sufficiently high capital buffers are ultimately the last line of defense of absorbing unforeseen losses. and when this is not enough, it is time for orderly resolution. in recent years every effort has been made to develop effective resolution tools for banks. so all in all, although the outlook is moderately positive, leading a bank is certainly not a walk in the park … see it more as a challenging hike, with some nice plush meadows in sight, but also some steep cliffs and canyons to be crossed. in dnb, as always, you find a critical travel companion, with our familiar approach. we value an open working relationship, based on dialogue and mutual trust, which i think is a good dutch tradition. we are clear about the supervisory expectations and legal requirements, and we offer information and suggestions, and bring together good practices through seminars and roundtables.