Ingves at the Riksdag Committee on Finance: Hearing on financial stability

"Structural problems on the housing market and the design of the tax system have contributed to the high level of debt among Swedish households". These were the words of Governor of the Riksbank, Stefan Ingves, as he began his presentation of the current situation to the Riksdag Committee on Finance by highlighting household indebtedness as the greatest risk to financial stability. Governor Ingves advocated a holistic approach with a combination of measures within several policy areas in order to come to grips with the structural problems on the housing market and mitigate the risk of household indebtedness.

He continued by addressing the vulnerability in the Swedish banking system, which is large, concentrated and interconnected with little equity. These vulnerabilities mean that banks need to strengthen their resilience - both as regards capital and liquidity.

In the discussions under the heading "Ten years after the financial crisis - are the regulatory frameworks effective?", Governor Ingves emphasised the lesson that financial crises are very costly for the economy and robust regulatory frameworks are required to avoid them. Much has been done to reinforce the regulatory frameworks since the crisis but more action is required. It is the Riksbank's assessment that banks' equity in relation to their total assets should increase and that it is important for banks to have their own insurance against liquidity risks in different currencies. In addition, the size of the foreign currency reserves must be adequate when the next financial crisis occurs.

Minister for Financial Markets, Per Bolund, Finansinspektionen Director-General, Erik Thedéen, and National Debt Office Director-General, Hans Lindblad, also took part in the committee's hearing.