Second, it may create an environment where there is pressure for some liberalisation of lending standards. Private-sector indebtedness At present, total private sector debt has reached € equivalent to approximately 205 per cent of GNP (174 per cent of GDP); this is very high both absolutely and in comparative terms and will be higher by the end of the year.
Historical experience from a number of countries suggests that high indebtedness may increase the vulnerability of the economy to shocks. The rate of debt accumulation has remained strong and virtually all categories of bank debt are increasing at rapid rates. These developments are inextricably linked to developments in the property market.