ECB contribution on Green Paper on Mortgage Credit

01 December 2005

The European Central Bank (ECB) issued its contribution to the European Commission’s Green Paper on Mortgage Credit and welcomes the Commission’s initiative regarding the European mortgage market. From a financial stability perspective the Eurosystem is of the view that changes in mortgage market characteristics that affect the amplitude and volatility of financial and housing cycles may have consequences which are difficult to predict and may potentially lead to financial crises.

Initiatives in this field, whether regulatory or market-led, need to be well designed and their possible implications for monetary policy and wider macroeconomic stability assessed carefully. Central banks, as well as banking supervisors, in their fields of competence, should also be closely associated to any initiatives in order to assess the potential impact on prices and financial stability.

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