In this decade, we have been able to tighten the collateral requirements somewhat, most recently in 2005, when we among other things restricted access to using bank securities as collateral. At that time, we announced that we would later go a step further. This promise remains intact. Central bank measures have curbed the fluctuations in interbank interest rates, but only for loans with short maturities. For longer maturities, premiums have continued to rise, and the premium on 12-month money market rates is now more than one percentage point. The turbulence has particularly affected banks with low deposits and considerable money market loans. Both Roskilde Bank, recently taken over by Denmark's Nationalbank, and Northern Rock, which had to be bailed out by the Bank of England last year, had fairly low deposit-to-loan ratios. Combined with large exposures in the property and construction sectors, this made them vulnerable. Norwegian banks generally have higher deposit-to-loan ratios, although there are differences. Banks and investors, both in Norway and abroad, are now charging higher premiums and higher prices for providing capital for acquisitions, restructuring and investment, and highly leveraged enterprises must pay high risk premiums when they borrow. It has become more difficult to obtain funding. Norges Bank’s survey of bank lending indicates that banks are gradually tightening their lending standards. Household debt growth has recently edged down. At the same time, consumption growth has slowed, but consumption is still higher than disposable income. Corporate credit growth remains high, at least for the time being.
The debate will be moderated by Mr. Valentin Lazea, the National Bank of Romania Chief Economist. Thank you for attending this conference, which I do hope will turn out to be a very successful one. 2  BIS central bankers’ speeches