The banks, which are particularly important because of the role they play in the payment system, are better capitalised than they were a decade ago. Credit risk management has also improved considerably. This applies in particular to the Swedish banks, which are now much better equipped to manage risks than they were prior to the bank crisis at the beginning of the 1990s. Central banks and financial supervisory authorities have also become better at assessing risks. Looking back, the really devastating bank crises have stemmed from a combination of soaring property prices and rapid growth in bank lending, and they have often taken place in countries with a fixed exchange rate. A growing number of central banks now closely follow macroeconomic factors that could lead to a build-up of imbalances in the financial system and publish their conclusions in special stability reports. The Riksbank is one of the forerunners in this field, based on the experiences gained from the Swedish bank crisis. For some years now, the IMF has carried out assessments of the functioning and safety of the entire financial sector in both developing countries and industrial nations. Sweden was subject to one of these FSAPs (Financial Sector Assessment Programs) last year and this year it will be the turn of Japan and the United Kingdom. These assessment programs compare the entire financial systems of the countries; banks, clearing houses, payment systems, legislation, supervisory authorities, central banks, etc. with the "best practice" in the world and any shortcomings are pointed out.

Each country can then choose whether or not to publish the results of the assessment. A summary of the assessment is included in the IMF's annual assessment of member countries' economies. Dependence and complexity are increasing While the markets have thus (hopefully, I should perhaps add) become more robust, our use of them has grown. Households and companies have become operators on the financial markets, mainly because these offer better and cheaper services than those traditionally offered via the banks. An increasing percentage of the investments made are financed on the market through shares and bonds in other countries than the USA. This has become possible because households' savings are to an increasing degree channelled into shares and mutual funds. We use the financial markets much more than we did just ten years ago. This means that we have good reason to be concerned over their functioning. It has also meant that questions regarding financial stability have acquired greater importance on the international political agenda. At the same time as use of the markets has grown, new instruments are being traded that are increasingly complicated in structure and their risk content has become more difficult to assess. Various forms of derivative have been developed, for instance, to spread risks more efficiently. This in itself creates conditions for reducing the vulnerability of the banks as well as the financing costs of the investments. Essentially, this development benefits long-term growth. In recent years, the use of credit risk derivatives and securitisation has increased, for instance.