But recent data on the housing sector indicates that the recovery has stalled (Chart 20). As with consumption, we are unlikely to see the typical surge of housing starts and residential investment that was a key feature of most past recoveries. There is already an unusually large volume of vacant homes for rent and for sale (Chart 21). More are likely to come onto the market in the months ahead due to the large volume of mortgage loans currently in the foreclosure process. For the government sector, large federal budget deficits are a constraint and fiscal policy is slowly shifting from an expansive policy back toward restraint. At the state and local level, the constraints are even more binding, as budgetary gaps will need to be addressed by spending cuts and tax increases (Chart 22). Exports rebounded sharply over the second half of 2009, particularly to the emerging world (Chart 23). However, domestic demand in Europe and Japan – important export markets for the United States – remains very weak. This suggests that the U.S. trade balance is likely to change little over the next year or two, and, thus, will be relatively neutral in terms of its impact on growth. Only business fixed investment is in a position to be a true locomotive of growth. Profits have stayed high relative to investment, and corporate balance sheets are awash with cash (Charts 24 and 25). However, even here, the growth impulse is likely to be weak.
Second, the “storm broke out”: after the default of Lehman Brothers, it became evident that such standard measures were no longer sufficient to achieve price stability in the euro area. We therefore provided enhanced credit support and, later on, non-standard credit operations in the light of the increased liquidity demands from the banking system. To avoid potential collateral shortages when satisfying this increased demand, we expanded the range of assets against 2/4  BIS central bankers' speeches  which banks can draw liquidity from the Eurosystem. But at the same time, we followed the principle of risk equivalence with the assets accepted under the pre-crisis rules. Let me give you a concrete example: since 2012, several national central banks of the euro area, including the one hosting this conference, have accepted additional bank loans as collateral. To ensure risk equivalence, haircuts on these assets were higher than those used in regular operations. This brings me to the third phase of the crisis, the “crosswinds”: in recent years the continued decline in inflation rates in the euro area called for additional non-standard measures – I am referring, of course, to the asset purchase programmes. This type of liquidity provision was a novelty for the Eurosystem, although the instrument of outright purchases has been envisaged as one of the legal and operational tools of the Eurosystem since its inception. Accordingly, additional risk control frameworks needed to be developed to keep the financial risks in check given the significant rise in exposures.