I have already mentioned the doubtful argument about changing the Link to jump-start the economy, and there have been other ideas put forward - all of them well intentioned - for example, that the Government should dig further into the foreign reserves to stimulate growth. One very specific suggestion which comes up periodically, and which gained currency once again over the summer, is the proposal that the HKMA should relax the guideline that says that banks should not lend more than 70% of the value of a residential property for which a mortgage loan is taken out: this is known as the 70% loan-to-value guideline. The idea behind the suggestion was that relaxation of the guideline would make it possible for prospective homeowners to borrow more and that this would help stimulate property purchases  4  BIS Review 44/2003  and thus stabilise the property market. I think the idea has now passed, partly because the property market appears to have stabilised, but mainly because it seems that public opinion accepted the reasoning that we and others put forward for maintaining the guideline. Setting aside the question of whether relaxing the guideline would have had any effect at all on demand for property, let us go through this reasoning. It is, in fact, quite simple. The guideline exists to prevent banks from excessively exposing themselves to the risks posed by an extremely volatile property market.
In some regions it was almost impossible to buy the policy without additional foisted services, there were difficulties with reimbursement of damages. The overall situation has improved, but some regions still experience difficulties with OSAGO. We have introduced an electronic OSAGO policy. For now, only 200,000 electronic policies have been issued, that is not many. Therefore, we welcome the law that would bind insurers to issue an electronic policy upon the customer’s request from January 2017. Last year, we improved the European accident statement rules – documenting road traffic accidents without involvement of the road police has become easier and more convenient. Microfinance organisations. Microfinancing is discussed with fervour. I would like to stress, that we believe it to be short-sighted to ban microfinancing. Short-term loans are in demand and if there is no regulated business, consumers will turn to illegal lenders. We took measures to ensure better protection of citizens’ rights, primarily, by limiting the maximum effective interest rate and fines and interests on overdue loans. And I believe we should move from the fourfold maximum to the twofold on the legislative level. As for illegal lenders, this problem needs a legislative solution, among other things. The accountability of illegal lenders is currently not very serious, so to say. Moreover, ironically enough, the illegal lender can recover the debt in court. We believe it to be important to deprive agreements with illegal lenders of relief at law. Non-governmental pension funds. We have established a system of pension savings guarantees.