Financial Stability Report 2025:2

Risks to financial stability remain in an uncertain world. For the moment, the ambiguity surrounding US trade policy has eased somewhat, but it could quickly return, and the security situation remains serious. At the same time, there are underlying vulnerabilities, not least in the form of persistently high and still growing public debt in several major economies. Despite this, the financial markets are characterised by a high appetite for risk, with high asset valuations and low risk premiums. In such an environment, unexpected events can trigger strong market movements, spreading quickly through the global financial system. The effects may also be amplified by the fact that non-banks have grown rapidly and become increasingly important players.

The major banks have a good initial position but are vulnerable to external risks. The major banks are profitable and fulfil their capital and liquidity requirements by a good margin. The international environment underlines the importance of good preparedness against operational risks such as cyber threats and dependencies on third-party suppliers. The major banks rely on global capital markets for funding and need to have good liquidity in relevant currencies. The monetary policy counterparties also need to have more active liquidity management and the operational capacity and willingness to borrow from the Riksbank if necessary.

More generous borrowing regulations may make more households vulnerable. Households are being restrained, and both house prices and debt are growing at a subdued pace. However, indebtedness remains high in an international perspective. There is also a risk that the proposed easing of mortgage regulations will lead to a resumption of debt and house price growth that is not sustainable in the long term. A loan-to-income limit would be an effective brake against such dynamics and should therefore be part of the macroprudential toolkit.

Better financial conditions benefit the property sector, but vacancies are weighing it down. Economic activity remains weak, but financial conditions have improved in the corporate sector. This has particularly benefited highly indebted property companies, but high vacancy rates in some segments and reliance on corporate bond funds mean that many of them remain vulnerable. Longer interest-rate fixation periods and debt maturities would make property companies more resilient.

Investment funds’ liquidity risks can be limited by new tools. Investment funds, such as corporate bond funds, play an increasingly important role in the financial system but often offer daily redemptions, even when they hold illiquid assets. It is therefore important that the funds strengthen their liquidity management, including through the proper use of the liquidity management tools planned to be introduced.

Stablecoins are growing rapidly and increase the complexity of the financial system. If their use continues to increase rapidly, risks may arise, for example from redemption runs, increased dependence in Europe on foreign infrastructure, a lack of transparency and the financing of criminal activities. It is therefore important that regulations are aligned and harmonised. It is also important that central bank settlement services are used in the event of a larger market emerging.