The Discussion Paper asks for your views about how these trade-offs should be managed. If a fully focused approach based on a very small number of conservatively calibrated requirements represents one extreme, 9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  and a modestly streamlined approach which trims a few elements from the current rulebook represents another, where on the spectrum between those poles would you prefer us to be? Key questions Let me conclude by summarising some of the key choices we seek comments on. First, is it right to start (as we suggest) with the smallest banks and then move in time towards bigger ones as we build a graduated strong and simple framework? Is this the right first step? Second, are the scope criteria we suggest the right ones and, if so, where should we draw the line in terms of size? Third, would you prefer a focused approach with few more conservative requirements, or a streamlined approach? The Discussion Paper contains questions addressing these choices along with questions about other, more detailed choices which we will face as we design a simpler regime. I strongly encourage you to submit comments on them all. As I began by saying, we approach all of these questions with an open mind and we will use your comments when we answer them. We will be accepting comments until 9 July.
It can only affect the long real mortgage rate after tax in the long run to the extent that the rate of inflation for a given tax system affects real tax deductions and real wealth and property taxes. An inflation target and low, stable inflation mean that this opportunity for influence disappears. Then monetary policy will no longer have any long-run effect on housing prices in relation to disposable income.8 Monetary policy could still affect the debt ratio if it could influence the loan-to-value ratio. A higher policy rate might limit the debt ratio if it led to a lower loan-to-value ratio, if there was a negative relation between the policy rate and the loan-to-value ratio. As can be seen in Figure 5, however, there is hardly any support for such a relation. Thus, there does not seem to be any support for the view that monetary policy could affect indebtedness in the long run. In the short run, that is a few years ahead, monetary policy has very little effect on housing prices and even less on the debt ratio, as the debt ratio’s numerator and denominator move in the same direction in the short run. At the latest monetary policy meeting (Sveriges Riksbank 2012d) I mentioned a typical result from empirical estimates, namely that a one percentage point higher policy rate for four quarters leads to just over 2 per cent lower housing prices and debt than would otherwise be the case.