##ing risk. i have also made it clear to the financial institutions that use of danmarks nationalbank ’ s lending facilities is not an acceptable solution for managing refinancing risk. i take this opportunity to repeat that message. securities should only be pledged as collateral to danmarks nationalbank in connection with ordinary monetary - policy operations. if we find bis central bankers ’ speeches that the system is being misused to support the housing market, we will take action and perhaps have a friendly talk with the institution in question. we have done that before. eligibility as collateral must not be a precondition for a given mortgage - credit product. * * * today i have presented a number of proposals for regulating various issues in relation to mortgage credit in order to make the system more resilient to future developments. the financial crisis has demonstrated that rare misfortunes do actually strike from time to time. this should be taken into account in financial regulation. this applies not only to banks – but also to mortgage banks. finally, i would like to thank the federation for our good cooperation during the past year and for inviting me to speak at today ’ s meeting. thank you for your attention. bis central bankers ’ speeches

the danish parliament, folketinget. but i should add that words must always be followed by action if the pact is to have any value. the third important step is the agreement to establish a permanent crisis resolution mechanism – the european stability mechanism, esm. this debt - financing mechanism is to be established for euro area member states from mid - 2013 and will replace the temporary financing mechanism for euro area member states in sovereign debt difficulties. together with imf funding and possibly bilateral contributions, the esm will help to ensure adequate responses to future sovereign debt crises. an important element of the plan is that the esm will offer loans only if macroeconomic stabilisation programmes are implemented at the same time, imposing stringent economic policy obligations on the recipient member state. danmarks nationalbank welcomes these improvements of the framework for economic cooperation. since our currency is closely tied to the euro, denmark will benefit from operating within the same overall economic framework as the euro area member states, bis central bankers ’ speeches thereby contributing to robust economic cooperation in the eu. but the strength of the cooperation can only be put to the test in practice. the need for stronger economic cooperation is reflected in the different economic situations of the individual eu member states at present. the best - performing member states are characterised by a long period of moderate wage inflation relative to productivity developments, as well as balanced public finances. germany and sweden are cases in point. it is also worth noting that these two member states did not have housing bubbles that burst. at the opposite end of the scale we find a group of member states with large sovereign debt problems and sagging competitiveness. their large government budget deficits and external deficits as well as their high government debts reflect that consumption and investment have been exceeding output for a long time. this can continue for a while, but naturally it is not sustainable in the long run. consumption and investment have been driven by factors such as rapidly rising house prices that subsequently plummeted. denmark is probably somewhere in between these two extremes. for the last 5 – 6 years, the danish economy has seen an excessive boom followed by a deep recession that we are only slowly working our way out of. in the wake of the crisis, the private sector has been consolidating strongly. corporate investments are low compared with earnings, and over the last 18 months private consumption has increased far less than disposable incomes. this means that consumption as a ratio of disposable incomes is low