Interest rates had gone so low, there was hardly any wiggle room to use interest rates for stimulating the economy. We could therefore no longer rely on the familiar channels of transmission of monetary policy. At the time, new transmission channels emerged such as the “expectations channel” and the “risk-taking channel”. So, advanced economy central banks needed to employ non-conventional monetary tools.
In our case, loan impairments in our mortgage institutions due to household exposures – and these institutions provides by far most of lending for housing – cumulates to less than 1 per cent of lending over the entire 5–6 years since the collapse of the housing bubble. Also for the banking sector itself, write down of household exposures have been very limited.