4  Yet it is clear that the unprecedented crisis caused by the pandemic has increased the credit, market and operational risks the banking sector faces.3 Precisely with the aim of mitigating and managing these risks, the European authorities have adopted various measures which, once more, have complemented those taken by the national fiscal and monetary policy authorities. First, supervisory processes have been adapted to release banks’ operational resources, gearing them to ensure business continuity. And, in turn, all those regulatory changes entailing increased requirements for banks have been postponed. In this connection, the BCBS has decided to delay the implementation of Basel III by a year. In any event, the BCBS has confirmed all jurisdictions’ commitment to full, consistent and timely transposition of Basel III under the new calendar. Second, aspects of the accounting regulations in force for the calculation of credit risk have been clarified, with the aim of preventing excessive procyclicality. As a counterpoint to this, it is necessary to prevent (particularly against the background of the prolongation of the crisis) a misuse of this flexibility from leading to inappropriate accounting practices that translate into a delay in the recognition of the effective impairment of certain credit exposures. Here, supervisory guidelines should be followed; these establish that the measures adopted in this area should not hamper the measurement of effective impairments and reasonable provisioning for credit risk, and they should afford banks the necessary incentives for maintaining adequate standards.

A natural explanation is that demand has been weak and uncertain. Our ordinary Business Survey, which was published last week, confirmed the picture that many companies currently perceive the situation as relatively uncertain and that they are so far cautious in implementing price rises. 2 Although there are some signs that price increases have been held back by an increase in competition, it is nevertheless reasonable to expect faster price increases and higher inflation when economic activity strengthens again and demand increases. In addition to inflationary pressures, developments in housing prices and household debt – and not least the counter-measures needed and their consequences – comprise an important, but difficult to assess, domestic condition for monetary policy. One should bear in mind the fact that experiences from other countries point to a high and growing indebtedness sooner or later having serious socio-economic consequences, but there is no clear limit as to when the situation becomes unsustainable. If one looks at the information available on indebtedness among the households taking on new mortgages, which thus in many respects comprise the purchaser side of the housing market today, I think there is reason for concern. On average, these households take mortgages equivalent to more than 350 per cent of their disposable incomes. The interest rates they pay on these mortgages are very low in an historical and an international perspective. This is partly due to the fact that a very high percentage of new Swedish mortgages are taken at variable interest rates.