Financial Stability Report 2022:1

Inflation has risen rapidly in many countries, which is partly due to the aftermath of the pandemic in the form of disruptions in global supply chains and rising en-ergy and commodity prices. Russia's invasion of Ukraine and lockdowns in China have contributed to a further rise in inflation. In response to this, central banks around the world have begun to conduct a less expansionary monetary policy, and interest rates have risen. It is uncertain how economic agents will manage higher interest rates. In Sweden, existing vulnerabilities have grown as a result of an increase in the debts of property companies and households. All in all, the threats to financial stability have increased.

The Riksbank’s stability assessment in brief, May 2022

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Growth in Sweden and abroad was strong last year but is expected to enter a more moderate phase this year. Russia's invasion of Ukraine has contributed to further increases in energy and food prices. Lockdowns in China and the invasion have also led to renewed problems in global supply chains. This has made the already high inflation rise even further. In response to this, central banks around the world have begun to conduct a less expansionary monetary policy. Taken together, this has made yields for government bonds and other fixed-income securities rise.


The Swedish financial system is working well, but the financial stability risks have increased. The risk outlook is characterised both by the impact on economic agents and asset markets of higher interest rates and the high inflation, as well as by the geopolitical situation and its economic effects. Property companies’ debt and interest-rate sensitivity have increased. The large and increasing exposures of the Swedish major banks to these companies therefore entails a risk. In addition, Swedish household debt has continued to increase more rapidly than their dis-posable income. Higher interest rates will have a tangible impact on highly indebted households and companies. There is also a risk of major price falls on real and financial assets in the light of higher interest rates and subdued growth prospects.

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The need for reforms in housing and tax policy remains and, if these are not implemented to the extent necessary, the need for macroprudential measures increases. To improve the resilience of the banking system, the Riksbank supports FI’s ambition to continue to raise the value of the countercyclical capital buffer in the near term to at least the neutral level of 2 per cent. It is also important that globally agreed standards, such as Basel III, are implemented in a full, timely, and consistent way.

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To promote transparency and liquidity in the Swedish corporate bond market, larger Swedish companies should apply the new Swedish benchmark standard. In addition, the Riksbank supports FI’s proposals for amendments to fund legislation with regard to, among other things, liquidity management tools and redemption frequency. The Riksbank also calls on market participants to use fully transaction-based reference rates, such as SWESTR, in financial contracts to avoid falling behind the international community in the use of such rates.

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It is also important to continue international cooperation and coordination to create a common view of how the risks linked to cryptoassets are to be managed. The regulatory work being done within the EU is a step on the way. The Riksbank supports the proposals by FI and the Swedish Environmental Protection Agency for the EU to investigate a ban on ‘proof of work’, an energy-intensive method for mining cryptoassets, and for Sweden to counteract the widespread establishment of the mining of cryptoassets using the method.

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The ability to prevent, detect and manage cyber threats needs to be strengthened, and coordination between public authorities and between public authorities and the private sector needs to be increased. That is why the work of the authorities to strengthen cyber security in the financial sector is an important initiative. The Riksbank also considers it important that financial agents incorporate climate-related risks into their risk analyses. The banks also need to report their exposures to climate risks.

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Updated 24/05/2022