The studies further cited successful community banks as having a strong and localized customer service focus – that is, avoiding the temptation to expand into new, less familiar areas and markets – and high community visibility, with staff members heavily involved in community activities, which in turn, created customer relationships built on trust. 5 So what did we learn from the experience of community banks with the financial crisis? A foundation built on good risk management practices and intimate local knowledge helped the successful banks to thrive during one of this country’s most difficult financial periods. The banks that prosper in the future will likely have characteristics similar to those that outperformed during the financial crisis. It bears repeating that community banks are critical in keeping local economies vibrant and growing. Strong community banks are essential to the provision of credit to small businesses in their localities. 4  See United States Government Accountability Office, Financial Institutions: Causes and Consequences of Recent Community Bank Failures, Statement of Lawrance L. Evans, Jr., Director Financial Markets and Community Investment, June 13, 2013. Also see Gilbert et al. (2013). 5  St. Louis Federal Reserve Study Shows Community Bank Model Can Thrive in Good Times and in Bad. BIS central bankers’ speeches  3  Importance of small business lending It is often noted that small businesses contribute disproportionately to employment growth in their communities. When you dig a little deeper into this stylized fact, you discover that it is new small businesses that are responsible for this growth.

During a financial crisis, it is important that there is a system of deposit guarantees to reduce the likelihood of a bank run. There have been such schemes in all of the EU countries for several years now with a minimum level of EUR 20,000. However, they are designed differently in different countries. The Riksbank has therefore argued in the context of European cooperation that these schemes should be harmonised. Under the pressure of the financial crisis last autumn it was decided that the guarantee level should be at least EUR 50,000 in all countries and in the longer term EUR 100,000. However, there are still differences regarding the funding of the guarantees and other regulations. These differences distort competition between the banks in different countries. They also make it more difficult to achieve effective crisis management. 4  BIS Review 7/2009  How Sweden is affected by the financial crisis Sweden's dependence on the outside world Sweden is highly dependent on events in the world around us. Sweden is a small and open economy with extensive foreign trade and a financial market that is well integrated with the international markets. Sweden's dependence on the outside world has increased over time. This means that a global financial crisis combined with a severe international economic downturn has a substantial impact on the Swedish economy. One way of illustrating a country's dependence on developments internationally is to consider exports and imports as a proportion of the total balance of resources.