finance and housing in central and eastern europe : a demand - side approach liviu voinea, deputy governor, national bank of romania finance and housing panel, bruegel annual meetings 2017 in 2015, esrb published the report on residential real estate and financial stability in eu. in november 2016, a detailed assessment of countries with high vulnerabilities followed. at, be, dk, fi, lu, nl, se, uk were identified as having medium term vulnerabilities on the residential real estate ( rre ) market. no cee country was singled out. the esrb methodology is based on the concept of “ stretch ”, applied to households, collateral, and banks. household stretch refers to vulnerabilities related to borrowers ’ indebtedness and ability to repay debt, as well as their capacity to maintain their consumption pattern. main indicators : household debt % gdp, financial assets to debt, debt service to income. collateral stretch refers to vulnerabilities relating to the property market. main indicators : residential price index, house price to income. banking stretch refers to vulnerabilities related to direct losses by banks and due to their rre exposures. main indicators : loans for house purchases, loans ’ growth rate and trend. the report finds that the structural features of the rre markets can be grouped into demand - side, supply - side and institutional factors. the demand side factors include : household income, credit availability and interest rates, home ownership rates, demographic factors. on the supply side : residential investment, housing construction and construction costs. institutional factors : housing taxes and subsidies, mortgage contract features, foreclosure and insolvency procedures. however, the report and the subsequent analysis are restricted in the definition of structural features, in particular on the demand - side. financial stability is seen in the narrow sense of households being able to repay loans, and banks being exposed to the risk of non - performing loans, mainly because of sharp changes in the house prices. much emphasis is put on the flow and on trends, and little attention is being paid to the stock. i would like to focus on these structural features at households ’ level, which eventually influence not only the rre markets but also pose risks to financial stability in a broader sense. the discussion is particularly timely, as residential real estate prices have resumed an upward cycle in the last three years in all eu countries except greece and cyprus. ex - communist countries in cee

authority and institutions under the financial system stability coordination forum, namely ministry of finance, bank indonesia, ojk, and lps, become an inevitable necessity. 16. as a macroprudential authority, in maintaining and sustaining financial system stability, bank indonesia contributes by continuing various macroprudential policies adopted since the middle of 2013. bis central bankers ’ speeches 17. such macroprudential policies among others include application of secondary reserve requirement ( rr ), rr connected with the loan to deposit ratio ( ldr ), loan to value ( ltv ) policy, and financial market deepening as well as financial inclusion increase. in addition, bank indonesia has also issued policies which may be used as prudential guidelines in external debt management by non - bank corporations. 18. we need to inform you that such macroprudential policies are basically temporary and not cross - sectoral. the policies may be at any time reviewed, fine - tuned, and refined to maintain financial system balance and stability as the objective of macroprudential policies. ladies and gentlemen, 19. observing the financial system condition and pressures as well as challenges of the national economy, bank indonesia ’ s macroprudential policy direction in 2015 will focus on efforts to : ( i ) mitigate financial imbalance risks, ( ii ) maintain liquidity adequacy and deepen financial market, and ( iii ) boost quality credit growth in productive economy sectors to support economic capacity increase. 20. such macroprudential policy direction is implemented among others through preparation of national and regional financial balance sheet, application of bank capital components in the form of countercyclical capital buffer ( ccb ), and improvement of rr - ldr provisions. 21. furthermore, macroprudential policy direction is implemented through the adoption of incentive / disincentive mechanism to boost quality msme credit extension and strengthen the legal basis for financial system security net ( jpsk ). 22. one thing we need to emphasize is efforts to maintain and sustain financial system stability and resilience relate not only to conventional financial system. bank indonesia, ojk, and the government must also seek to increase stability and resilience in sharia finance. it is conducted among others through development of sharia finance instruments, sukuk market deepening, and enabling regulation formulation. 23. we must also be alert to the constellation of global monetary policies, where divergence occurs in monetary policies of the fed and other developed countries, which