16.11.2018  Welcome address at the Conference “Economic Policies, Trade Integration and Sustainable Job Creation. A View from the Mediterranean Countries” Banco de España and European Institute of the Mediterranean with the support of the Central Bank of Tunisia Pablo Hernández de Cos Governor  Good morning ladies and gentlemen. It is a great pleasure for me to be here in Tunis to welcome you all to this Conference on Economic Policies, Trade Integration and Sustainable Job Creation, jointly organised by the Central Bank of Tunisia, the Banco de España and the European Institute of the Mediterranean (IEMed). Let me start by thanking Governor El Abassi for his kind words and our colleagues from the Central Bank of Tunisia and the European Institute of the Mediterranean for their cooperation in organising this Conference. I would also like to congratulate Governor El Abassi and all the staff of the Central Bank of Tunisia for the 60th anniversary of this institution, created just two years after the independence of Tunisia. I wish to convey my best wishes for the future of this institution which, through the attainment of its of macroeconomic and financial stability objectives, can make a decisive contribution to the prosperity of the country and its citizens. Governor El Abbasi, I hope that this Conference will be an initial step towards permanent cooperation between our respective institutions.
As a result, the household sector’s financial condition today is in unusually good shape for this point in the economic cycle. In relative terms, household indebtedness is low, and—thanks in part to low interest rates—debt service burdens relative to household income have fallen to levels not seen since at least the early 1980s. As we will show in today’s presentation, compared to 2008, a greater proportion of overall debt today is now held by older households that have higher and more stable incomes and more experience as borrowers, on average. Consequently, a much larger proportion of debt is currently held by borrowers with higher credit scores. The resulting higher overall debt quality is reflected in historically low overall delinquency rates. Transition rates into new delinquency are below the levels of the early 2000s, and foreclosure and bankruptcy rates in 2016 are the lowest since our data series began in 1999. Notwithstanding this overall rosy picture, the improvement in aggregate debt quality and performance conceals important underlying changes in debt holdings that could be consequential, with implications for the housing market and for consumer spending over the longer term. While older borrowers hold more debt of all types, there has been a significant shift among younger people toward student debt and away from mortgage and other debt. Student debt has increased more than fivefold over the past 14 years, with more young adults taking out loans and borrowing larger average amounts. And, while debt delinquency rates overall have fallen, those for student debt have remained elevated.