House prices increased faster than people’s incomes – from five times earnings in 2000 to over eight times earnings by 2007. As most people borrow to buy houses, this drove up outstanding household mortgage debt from 50% of GDP to around 85%. Household debt as a whole went from around 110% of household income to over 165%. Commercial property prices doubled and lending to support commercial property investment trebled. Should the Bank have tried to rein this in? The MPC’s objectives made no mention of financial stability. Much of the international thinking at the time was that central banks should not try to use monetary policy tools like interest rates to address asset bubbles and financial stability risks. Rather they should deal with the consequences of such risks if they crystallised. Or, in the jargon of the day, not to “pop bubbles”, but to “mop up” the mess if and when they burst. Responsibility for financial stability at the time was shared jointly the Bank, HM Treasury and the Financial Services Authority, the latter body responsible at the time for regulating banks and building societies. True, the Bank as whole did have an objective to contribute to the maintenance of the stability of the financial system as a whole. But it had no formal powers with which to do this. The FSA had powers but its focus was on individual institutions rather than vulnerabilities building across the system as a whole.
Jacqueline Loh: Public-private partnership – the way forward for natural catastrophe risk management in Asia Opening address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the 5th Institute of Catastrophe Risk Management Symposium, Singapore, 24 April 2014. *  *  *  Professor Bertil Andersson (President, Nanyang Technological University, Singapore), Professor Haresh Shah (Founding Chairman, Institute of Catastrophe Risk Management (“ICRM”)), Professor Pan (Director, ICRM), Distinguished guests, ladies and gentlemen, good morning. Introduction 1. It is my pleasure to join you today at the 5th ICRM Symposium. The theme for this year’s Symposium, “Financing of Natural Catastrophes in Asia – The Role of Private Sectors, Governments and Regulators in Natural Catastrophe Management”, highlights the importance of having both the private and public sectors collectively manage natural catastrophe risks. Management of catastrophe risks spans a spectrum of activities across the entire risk management value chain, from raising risk awareness, to promoting effective risk assessment and pricing, and co-developing ex-ante risk financing solutions. This is a very relevant discussion topic, at a time when Asia is facing increasing vulnerability to natural catastrophes. 2. In keeping with the conference theme, I will be sharing a few observations on how we can strive towards sustainable risk financing using a Public-Private Partnership (“PPP”) approach. Asia is more at risk from natural catastrophes 3. Over the last 30 years, Asia has borne the brunt of natural catastrophe losses, accounting for almost half of the world’s estimated economic losses from natural disasters1.