Financial regulators have been advised to consider including caps on loan-to-valuation ratios and also caps on debt to-to-income ratios in the macro prudential toolkits. An International Monetary Fund report released yesterday warned that systemic instability remained in the global financial system and argued that regulators needed to keep working on pollcy options.Caps on LVRs have been in the news since the Reserve Bank of New Zealand introduced a rule restricting new residential mortgage lending at LVRs of over 80 per cent to no more than 10 per cent of the dollar value of their new lending flows.In a recent report on the property exposures of Australian authorised deposit-taking institutions, the Australian Prudential Regulation Authority found that of the A$79 billion of new residential term loans approved by ADIs in the June quarter, $10.6 billion (or 13.5 per cent) had LVRs above 90 per cent. Another 19.3 per cent of the value of loans approved in the June quarter had LVRs of between 80 per cent and 90 per cent.In a subsequent article in its journal, Insight, APRA provided a caution on the significance of "the low credit growth and low interest rate environment [which] presents a twin challenge to lending standards for ADIs."The IMF report, "Key aspects of macro prudential policy", said: "Macroprudential policy uses primarily prudential tools to achieve its objectives. This can include countercyclical capital buffers and provisions, sectoral capital requirements, measures to contain liquidity and foreign exchange mismatches, and caps on loan-to-value and debt-to-income ratios."Macroprudential policy can also seek to affect the design of products offered to borrowers in retail markets, and the functioning and institutional underpinnings of wholesale markets."According to the report, 24 countries already have LVR caps and 14 have DTI caps.