30 November 2017  Speech on the 60th Anniversary of the National Association of Specialised Lending Institutions (ASNEF) Luis M. Linde Governor  Good evening everyone. It is a pleasure for me to take part in this celebration of the 60th anniversary of the National Association of Specialised Lending Institutions. As your president, Fernando Casero, has just mentioned, throughout its history your Association has played a very important role in promoting and enhancing consumer lending, which is a key factor in driving economic growth. Indeed, consumer lending has a series of characteristics that make it especially relevant both for the financial system and economic activity. On the one hand, it is highly cyclical and is, therefore, a leading indicator of confidence among both consumers and financial institutions. On the other, it generally leads the way in terms of adaptation to innovation. As is well known, in the past consumer lending played an important part in the expansion of credit cards, and more recently it has been at the forefront of the incorporation of new technologies. In the expansionary phase that began after 2000, consumer lending grew rapidly in Spain, reaching a balance outstanding of € billion in mid-2008. The financial crisis reduced these figures, down to almost half that amount by early 2015. Since then, in keeping with the economic recovery, consumer lending has been very dynamic.
The testing operations don’t represent a change in the stance of monetary policy, and no inference should be drawn about the timing of any change in the stance of future policy. Not surprisingly, the exercise to date has confirmed that the level of facility use is sensitive to the rate offered (Exhibit 1). For much of the testing period thus far, the spread between market rates and the fixed rate offered on reverse repos has been relatively wide. However, we’ve seen take-up increase in instances where the spread narrowed. Also not surprisingly, participation increased on quarter- and month-end dates, particularly by GSEs and money funds, which noted that uncertain access to overnight secured investments on these dates, combined with lower unsecured overnight rates, increased the attractiveness of our operations. We’ve also seen that different counterparty types have used the facility differently, reflecting their business models and investment alternatives. Through November, total usage of the facility has ranged from $ million to $ billion and the number of bidders has ranged from 4 to 87 per operation (Exhibit 2). Excluding the quarter- and monthends, daily bids have averaged $ billion from 17 bidders. Operationally, market participants generally characterize the exercise as smooth, with minimal disruptions. From a policy perspective, participants have indicated that they expect that a facility, if executed in full scale in the future, should be an effective tool for increasing the Federal Reserve’s control of short-term money market rates through a stronger floor.