There are signs that these and other rules are working, as we are already seeing a significant reduction in the issuance of very high loan-to-income mortgages. High debt levels and monetary policy However, these regulations apply only to new mortgages. The stock of household debt, including the $ trillion in existing mortgages, will persist. And this debt has increasing implications for monetary policy.
Let me now discuss the challenges that the BSP faces in the pursuit of its mandate of ensuring stable prices and a sound banking system. The first challenge is the anticipated US economic slowdown. There is a consensus among multilateral institutions, investment banks and credit rating agencies that the US economy will slow down in 2008.