Opinion of the European Central Bank of 20 April 2017 on additional macroprudential tools (CON/2017/14)
Date: 2017-04-20
Institutions: European Central Bank
Subjects: Sweden, financial solvency, financial stability, financial supervision, household consumption, indebtedness, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 20 April 2017 

on additional macroprudential tools 

(CON/2017/14) 

Introduction and legal basis 

On 22 February 2017, the European Central Bank (ECB) received a request from the Swedish Ministry of 

Finance for an opinion on a proposal for draft framework legislation on the delegation of powers from the 

Swedish  Parliament  to  the  Swedish  Government  and  the  Swedish  Financial  Supervisory  Authority 

(Finansinspektionen) to implement additional macroprudential tools (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC1, as 

the  draft  law  relates  to  rules  applicable  to  financial  institutions  insofar  as  they  materially  influence  the 

stability  of  financial  institutions  and  markets.  In  accordance  with  the  first  sentence  of  Article 17.5  of  the 

Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.  

1.  

Purpose of the draft law 

1.1  The  overall  purpose  of  the  draft  law  is  to  counteract  excessive  household  indebtedness  and 

macroeconomic  and  financial  risks  in  credit  markets  in  Sweden.  In  this  respect,  the  draft  law 

complements  and  enhances  the  existing  macroprudential  framework,  in  respect  of  which 
Finansinspektionen is the competent supervisory authority2. In particular, the draft law provides that 
credit  institutions  operating  under  the  Banking  and  Finance  Business  Act  (BFA)3  and  creditors 
operating  under the  Mortgage Credit  Business Act  (MCA)4  shall  perform their business in  such a 

manner so as not to contribute to financial imbalances in the credit market. 

1.2 

In  order  to  be  consistent  with  the  provisions  in  Directive  2014/17/EU  of  the  European  Parliament 
and  of  the  Council5,  which  has  been  implemented  in  Sweden  through  the  MCA,  the  draft  law 

provides  that  creditors  acting  under  the  MCA  shall  impose  repayment  requirements  that  are 

compatible  with  a  sound  amortisation  culture  and 

that  counteract  excessive  household 

1 

2  

3  
4  
5  

Council  Decision  98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
See  Paragraph  1(3)  of  the  Swedish  Regulation  (2009:93)  containing  Instructions  for  Finansinspektionen  (Sw. 
Förordning (2009:93) med instruktion för Finansinspektionen). 

The Banking and Finance Business Act (Sw. Lag (2004:297) om bank- och finansieringsrörelse). 
Mortgage Credit Business Act (Sw. Lag (2016:1024) om verksamhet med bostadskrediter). 

Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for 
consumers  relating  to  residential  immovable  property  and  amending  Directives  2008/48/EC  and  2013/36/EU  and 
Regulation (EU) No 1093/2010. 

  
 
 
 
                                                 
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ECB-PUBLIC 

indebtedness. This will have the effect of aligning amortisation requirements applicable to creditors 

operating under the MCA with amortisation requirements applicable to credit institutions operating 

under the BFA. 

1.3  Under the draft law Finansinspektionen will be authorised to implement additional macroprudential 

tools  in  order  to  combat  macroeconomic  and  financial  stability  risks  in  Sweden.  The  granting  of 

authorisation to Finansinspektionen, to allow them to implement additional macroprudential tools, is 

to  be  combined  with  the  requirement  that  Finansinspektionen  must  obtain  the  Swedish 
Government’s consent before regulations on macroprudential tools enter into force.6 

1.4 

In  addition,  the  draft  law  further  provides  that  Finansinspektionen  may  recognise  regulatory 

requirements  in  other  Member  States  of  the  European  Union  that  correspond  to  the  Swedish 

amortisation requirement or the requirement not to contribute to financial imbalances in the credit 

market.  The  recognition  of  regulatory  requirements  of  other  Member  States  will  affect  Swedish 

credit  institutions  and  creditors  which  operate  in  those  other  Member  States  either  through  a 

branch  or  by  offering  and  providing  services  from  Sweden  without  establishing  a  branch.  A 

recognition of such regulatory requirements, which a Swedish credit institution or creditor may be in 

breach  of,  will  enable  Finansinspektionen  to  impose  formal  warnings,  injunctions  or,  in  severe 

cases, a revocation of the license of such credit institutions or creditors.  

2.   General observations  

2.1  The ECB understands that household indebtedness has increased remarkably in Sweden over the 

past years. It is because of this that the ECB welcomes the core objectives of the draft law, namely 

to counteract excessive household indebtedness and macroeconomic and financial stability risks in 

credit  markets  in  Sweden  and  to  do  so  through  the  BFA  and  the  MCA.  The  approach  helps  to 

reduce  regulatory  leakage  between  credit  institutions  operating  under  the  BFA  and  creditors 

operating  under 

the  MCA.  The  ECB  also  welcomes 

the  granting  of  authorisation 

to 

Finansinspektionen to allow them to implement additional macroprudential tools such as restricting 

the size of the loan granted in relation to the household’s income or earning capacity, the size of 

the loan in relation to the value  of an underlying security, the interest rate fixation period  and the 
size of the loan in foreign currency.7 

2.2  The ECB welcomes the possibility to recognise regulatory requirements of other Member States as 

equivalent  to  the  Swedish  amortisation  requirement  and  the  requirement  not  to  contribute  to 

financial  imbalances,  in  order  to  counteract  excessive  household  indebtedness  and  financial 

imbalances abroad caused by Swedish credit institutions or creditors.  

6  

7  

The requirement for competent supervisory authorities to obtain the consent of the government is generally required 
when proposed regulations can result in essential costs for the State, a municipality or a county due to a generally 
applicable  regulation  (Regulation  (2014:  570)  on  the  Government's  consent  to  the  adoption  of  certain  regulations 
(Sw. Förordning (2014:570) om regeringens medgivande till beslut om vissa föreskrifter). 

This is in line with the Governing Council statement on Macroprudential Policies from 15 December 2016, in which 
the  ECB  called 
for  borrower-based  measures”. 
https://www.ecb.europa.eu/press/pr/date/2016/html/pr161215_1.en.html.  

“implementation  of 

frameworks 

legislative 

the 

for 

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ECB-PUBLIC 

2.3  The ECB refrains from making any observations regarding the possible institutional implications for 

Finansinspektionen’s  operational  independence,  as  the  competent  supervisory  authority  dealing 

with macroprudential affairs, arising out of the potential requirement that Finansinspektionen must 

obtain  the  Swedish  Government’s  consent  before  any  regulations  on  macroprudential  tools  enter 
into force.8  

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 20 April 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

8  

See paragraph 2.2 of ECB Opinion CON/2016/18. 

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