But then one must remember that the explanation for these capital ratios looking so good is largely because the banks use low risk weights in their internal risk models. If one instead looks at the non risk-weighted capital adequacy, the picture is different. The so-called leverage ratio is almost at the same level as prior to the financial crisis. The risk of a new financial crisis is thus certainly not eliminated, and we should make higher demands of the banks regarding capital, so that the banking system becomes more robust and can better withstand a crisis. The major banks’ risk-weighted capital adequacy ratios are relatively high, but the leverage ratios are at almost the same levels as prior to the financial crisis…  Note. Per cent. The major Swedish banks’ core capital ratios, Sources: The banks’ interim reports and the risk-weighted compared with non risk-weighted. Weighted average. the Riksbank  ...and relatively low in an international perspective  Note. Per cent, March 2017. Leverage ratio for European banks. Calculated according to the applicable definition in Basel III. Sources: SNL Financial and the Riksbank  4 [14]  The Swedish banks are dependent on foreign funding. I mentioned earlier that banks around the world are using funding from abroad to an increasing extent. So what about the Swedish banks? Well, the Swedish banking system’s funding in foreign currency currently amounts to around 150 per cent of GDP, which is three times as much as at the beginning of the 2000s.

This is not only my opinion and the opinion of the Riksbank, it is also shared by the International Monetary Fund. In its Article IV review of Sweden's economy in 2016, the IMF concluded that the foreign currency reserve should not be smaller than it is now. The European Central Bank, ECB, has also recently issued an opinion recommending that Sweden should not reduce the size of its foreign currency reserve below the current level. 10  The foreign currency reserve should be paid for by the banks The cost – or insurance premium – of having a liquidity insurance in the form of a foreign currency reserve is at present charged to the Riksbank’s earnings and central government finances and is calculated at around SEK 400-500 million a year. This is, of course, a lot of money, but calculated per inhabitant per year the insurance premium is only SEK 40-50. This corresponds to around two cups of coffee or half of a cinema ticket. Moreover, it is actually a cost that could well be transferred to the banks, which are the primary beneficiaries of such an insurance. One could say – to take it to an extreme – that tax-payers currently subsidise the banks by almost half a billion a 9 The Government’s draft referral to the Council on Legislation (in Swedish):  http://www.regeringen.se/494cc9/contentassets/c34c52bc62904b2984784e2b94f1e6aa/riksbankensfinansiella-oberoende-och-balansrakning-utkast-till-lagradsremiss The Riksbank’s consultation response: http://www.riksbank.se/en/Press-and-published/PressReleases/2017/Important-to-have-sufficient-foreign-currency-reserve-rapidly-available-in-a-crisis/ Other public authorities’ consultation responses regarding the foreign currency reserve can be found here (in Swedish): http://www.fi.se/sv/publicerat/remissvar/2017/remissvar-pa-utkast-till-lagradsremiss-riksbankensfinansiella-oberoende-och-balansrakning/ and https://www.riksgalden.se/globalassets/dokument_sve/om_riksgalden/remissvar/2017/riksbankens-finansiellaoberoende-och-balansraekning-remissvar.pdf 10 ECB (2017).