The Basel III Accord intends that two quantitative liquidity requirements be introduced, one short-term and one long-term. The short-term measure liquidity coverage ratio (LCR) is intended to ensure that the banks have enough liquidity to cope for 30 days under stressed market conditions. The long-term measure net stable funding ratio (NSFR) is aimed at reducing the maturity difference between assets and liabilities. The Basel Committee’s plan is for the LCR to be introduced in 2015 but, as the Swedish banks largely use short-term market funding in foreign currency, the Riksbank and Finansinspektionen consider that Sweden should go in advance and introduce the LCR in January 2013. 8 In addition to this, the Swedish banks will also need to have the LCR at 100 per cent in the foreign currencies euro and US dollar. So, even here, we consider that higher requirements should be placed on the Swedish banks than the Basel III regulations do. Countercyclical capital requirements, a macroprudential policy instrument in focus One of the macroprudential policy instruments being discussed most in Europe at present is countercyclical capital requirements. These are included as a part of the new Basel regulations. Consequently, this is an instrument that we know we will be able to use in Sweden in a number of years. The principle is simple: when the financial risks increase, the banks will successively be forced to increase their countercyclical buffers; when the risks recede, they will be permitted to decrease them. However, in practice, the instrument is not entirely so simple to design.

However, over the long term,  13  In the absence of empirical experience of conducting macroprudential supervision, theoretical analyses can provide guidance to the consequences that can be expected. However, academic research into this area is still in its infancy and it is therefore difficult to draw any unequivocal conclusions from it at present. Goodhart et al. (2012) is one example of a study investigating the interplay of a number of macroprudential policy instruments, which is to say whether these complement or substitute each other. BIS central bankers’ speeches  7  something more than a qualified discussion forum will be needed. To become really effective, macroprudential policy needs to acquire the distinct status of an independent policy area with its own tools for promoting stability in the financial system as a whole and a clear allocation of responsibility. Assessing and demanding responsibility demands a clear allocation of responsibility. Another benefit of establishing a clear and effective framework for macroprudential policy is that this will allow monetary policy to be relieved of taking account of financial stability. In my opinion, this consideration is creating a risk that monetary policy will become unclear and unpredictable. A functioning macroprudential policy will thus let us both reduce the risk of financial crises and give us a monetary policy that can more efficiently stabilise inflation around the inflation target and resource utilisation around a sustainable level. Thank you! References Borio, C., 2010, “Implementing a Macroprudential Framework: Blending Boldness and realism”, Bank of International Settlements.