But in virtually all of this literature, financial intermediaries – if present at all – are very simple  12  See e.g. Christiano, Motto and Rostagno (2008); Curdia and Woodford (2009); Gerali, Neri, Sessa and Signoretti (2008); Goodfriend and McCallum (2007), as well as the earlier work on the broad credit channel  16  BIS Review 101/2009  institutions and any incentive or information problems relate to the borrower. But much of what has happened recently is best understood in terms of frictions that lie within the financial sector itself. Models that have a role for bank capital and where the evolution of banks' balance sheets play a central role 13 , such as the recent contribution by Gertler and Karadi (2009) mentioned earlier, come closest to providing a suitable framework for analysis. However, even these contributions neglect important features of the present crisis. Developing macroeconomic models with a sufficiently rich specification of the financial intermediation sector that capture the variety of incentive distortions and information frictions I have discussed this evening represents a challenging research agenda 14 . Reintroducing the financial intermediation sector as a source of shocks, rather than merely acting as an amplifying mechanism as the broad credit channel does, would represent something of a return to older models of the business cycle, in which credit creation and destruction played a central role. There has, in particular, been renewed interest in the work of Hyman Minsky as a result of recent events (see e.g. Minsky, 1982).

In my opinion, to achieve a better situation for coming generations, we need to create a new, lower adjusted equilibrium on the housing market. This would also contribute towards reducing the differences between insiders and outsiders – the haves and the have-nots. Furthermore, household indebtedness would gradually decrease and would no longer create economic risks in the same way. I am aware that these measures would affect my generation’s housing assets today. But my opinion is that they need to be implemented so that the housing market in Sweden can function well tomorrow. 11 [13]  References Alter, A, Feng, A and N Valckx (2018), “Understanding the macro-financial effects of household debt: A global perspective”, IMF Working Papers No 18/76. Bäckman, C and C Lutz (2018), ”The impact of interest-only loans on affordability”, Regional Science and Urban Economics. Cunliffe, J (2019), “Housing tools revisited”, Bank of England. Dermani, E, Lindé, J, and K Walentin (2016),”Is a bubble forming in Swedish housing pices?”, Economic Review 2016:2. Sveriges riksbank. Emanuelsson, R (2015), ”Supply of housing in Sweden”. Economic Review 2015:2. Sveriges riksbank. Emanuelsson, R, Katinic, G and E Spector (2018), ”Developments in the housing market and their contribution to household debt”, Economic Commentary no. 14. Sveriges Riksbank. Emanuelsson, R, Melander, O and J Molin (2015), “Financial risks in the household sector”, Economic Commentary no. 6. Sveriges Riksbank. European Commission (2019), Country Report Sweden. European Systemic Risk Board (2016). ESRB/2016/11 on medium-term vulnerabilities in the residential real estate sector of Sweden, September 2016.