For the HKMC, MBS provide an important source of funding and an effective tool for managing the risks of its fast-expanding mortgage portfolio. In a short span of six years, the Corporation’s mortgage pool has increased to over $ billion, which is funded by debts of a similar amount. Momentum is expected to pick up further with the planned acquisition of between $ billion and $ billion of mortgage portfolios before the end of 2004. The proceeds from issuance of MBS help relieve the funding pressure of the mortgage purchase programme. The securitisation process also enables the Corporation to reduce the Prime-HIBOR basis risk and the refinancing risk of its mortgage portfolio. There are in fact two MBS programmes that have been developed by the HKMC. We made a modest start in October 1999 with the launch of the Guaranteed Mortgage-Backed Pass-Through Securitisation Programme. There were a total of eight series of MBS issued under that Programme, with an aggregate amount of about $ billion. The back-to-back structure of the MBS issued allows the participating banks to keep a substantial portion of the cash flow from the mortgage pools, while reducing the credit risk and capital cost through the HKMC’s guarantee of the securities. It also provides them with the option at any time to off-load part or all of an issue to suit their liquidity or trading objectives.
Philip R Lane: Monetary policy, low interest rates and low inflation Dinner remarks by Mr Philip R Lane, Member of the Executive Board of the European Central Bank, at the Centre for European Reform, London, 27 February 2020. * * * It is a pleasure to be invited to speak at the Centre for European Reform. Before turning to the longer-term issues that are the primary focus of this speech, I wish to comment on the coronavirus. As emphasised by President Lagarde earlier today, we are closely monitoring the information about the spread of the coronavirus, which is first and foremost a public health emergency, with the most severe impact on the families of those that have died from the virus. In terms of the macro-financial implications, the more quickly is the virus contained, the smaller will be the impact on the world economy and the faster will be the recovery. Conversely, more widespread contagion and a longer interruption in normal economic activity constitute additional downside risks to near-term projections. Accordingly, it is a priority for the ECB to assess on a continuous basis the implications of the evolving situation for economic and financial conditions. In my remarks this evening, I aim to outline some of the factors that are relevant in understanding the role of monetary policy in the current environment of low interest rates and low inflation.1 First, there has been a trend decline in the underlying equilibrium real interest rate since the 1980s.