This could just expose lenders to higher risks and it can also expose illinformed borrowers to increased risk of debt distress. These concerns related to product development highlight the need for proportionate regulation that adequately balances the need for flexibility and openness to innovation, on one hand, with that of mechanisms to ensure that risks are properly managed, on the other.
In my judgement, these uncertainties speak for a patient, persistent and prudent approach to monetary policy normalization, as President Draghi has expressed our tactics. This is a balancing act, where we must ensure the sustainable converge of inflation to our definition of price stability and simultaneously protecting the on-going recovery of employment and the repair of balance sheets.