That was my starting point for our December meeting, the minutes of which will be published next week. Summary and conclusions Let me try to pull together some of my central themes. 21  “…households have increased their debt….more debt unavoidably leaves them more vulnerable to bad luck, eg adverse economic shocks”, Tucker, P. M. W. (2003), “Credit conditions and monetary policy”, speech at the Leeds Financial Services Initiative, Bank of England Quarterly Bulletin, Autumn 2003, p. 373. BIS Review 149/2007  9  I have stressed that we should take care to avoid talking about money when we mean credit. In a similar spirit, we should be clear when we mean total credit and when bank lending, but without assuming the two are divorced. I have also stressed the need for attention to the underlying drivers of credit conditions throughout the economic cycle. In today’s financial system, we may well need richer data on credit quantities and flows outside the banking sector, perhaps along the lines of the US Flow of Funds statistics. The Bank’s new Credit Conditions Survey is also designed to give us better qualitative information to put alongside the quantity and price data. Even so, as with asset prices more generally, we will sometimes find it hard to distinguish between changes in credit conditions warranted by fundamentals and those that are not. Failure to recognise fundamentally warranted and sustainable shifts would deplete welfare.
11  Chart 5: Securitisations relative to stock of M4 lending  Chart 6: UK household sector assetbacked security spreads Bas is points  Percentage of sectoral M4L stock 25  400  20  300  350  Basis points  Commercial mortgages Credit cards Prime mortgages Non-conforming mortgages (LHS)  150 120  250  Household secured 15  90  200 60  150  10  Household unsecurd  0 2002  0 98  99  00  01  02  03  04  05  06  07  0 2003  2004  2005  2006  2007  Source: LehmansLive Note: weighted averages of AAA, AA, A and BBB 5years spreads for prime and commercial mortgages and of AAA, A and BBB 5-year spreads fro credit cards and non-confirming mortgages.