Michele Bullock, RBA assistant governor, financial system, spelled out that the Reserve Bank of Australia, and APRA, were "prepared to do more if needed" as residential investment lending recovers momentum in the face of APRA's curb on bank lending of this type.Speaking at a Bloomberg function yesterday, Bullock set out the context."There seems to be more willingness for regulators and policymakers to take action if they see risks building. Prior to the GFC there was a school of thought that because asset price bubbles could not be detected in advance, it was better to clean up after any bust, rather than lean against the cycle with policy. "This was not the only view, however, and some policymakers had argued for a number of years that there were indicators that could be used to detect financial imbalances and that in some circumstances policy settings should take these imbalances into account."Bullock explained: "Post-GFC, there has been some swing to this latter view. There is now more acceptance of the need to take action when system-wide risks are rising. "This is reflected in the increasing use of what are commonly known as macroprudential policies."?The RBA's assistant governor then leaned into the detail.?"In Australia, we see macroprudential policy as part and parcel of the financial stability framework. As we have set out on other occasions, the essence of macroprudential policy is that prudential supervisors recognise potential system-wide risks in their supervision of individual institutions and react accordingly. APRA can and does take an active supervisory stance, modifying the intensity of its prudential supervision as it sees fit to address institution-specific risks, sectoral risks or overall systemic risk. A recent example might help to illustrate this."In 2014, the Australian regulators took the view that risks were building in the residential housing market that warranted attention," a reference to what have become known as "speed limits", or the cap of ten per cent growth on investment lending."There was very strong demand for residential housing loans, particularly by investors …. the share of new loans that were interest only was drifting up and the growth of lending for investment properties was accelerating. Unsurprisingly in this environment, the growth in housing prices was strong, particularly in Melbourne and Sydney."These measures have worked, and they haven't."There is no doubt that the actions did address some of the risks. Nevertheless, the early experience suggests that, while the resilience of both borrowers and lenders has no doubt improved, the initial effects on credit and some other indicators we use to assess risk may fade over time. "We are continuing to monitor their ongoing effects and are prepared to do more if needed," Bullock said.One student of this topic, Sean Keane of Triple T Consulting, in a daily report for Credit Suisse, observed that Bullock was "seemingly speaking on behalf of the RBA in its role as part of the Council of Financial Regulators."Treasurer Scott Morrison indicated that the CFR leaders met late last week to discuss the Australian housing market, and macro-prudential measures