are an example of this. financial supervisory authorities in most countries have been strengthened considerably, although the complexity of the markets always threatens to increase more rapidly than the competence to supervise them. quantitative deregulation of the financial markets is largely complete and the adaptations have been made. increased experience of acting in a deregulated environment should in itself have reduced the risk of financial crises. 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 channel

07 mar - 06 sources : statistics sweden and the riksbank figure 5. forecasting memory, gdp percentage points 0, 5 riksbank time series model ( ar ( 1 ) ) standard deviation 0, 4 0, 3 0, 2 0, 1 0, 0 kvartal sources : statistics sweden and the riksbank figure 6. forecasting memory, employment percentage points 0, 5 0, 4 0, 3 0, 2 riksbank time series model ( ar ( 1 ) ) standard deviation 0, 1 0, 0 kvartal sources : statistics sweden and the riksbank figure 7. forecasting memory, productivity percentage points 0, 7 riksbank time series model ( ar ( 1 ) ) standard deviation 0, 6 0, 5 0, 4 0, 3 0, 2 0, 1 0, 0 kvartal sources : statistics sweden and the riksbank figure 8. forecasting memory for the kpix percentage points 0, 7 0, 6 0, 5 0, 4 0, 3 0, 2 riksbank time series model ( ar ( 1 ) with seasonal dummies ) 0, 1 standard deviation 0, 0 kvartal8 sources : statistics sweden and the riksbank figure 9. correlations between forecasts and outcomes for the different variables annual rates of change 1, 0 0, 8 0, 8 0, 6 0, 6 0, 4 0, 4 0, 2 0, 2 per cent 1, 0 0, 0 0, 0 - 0, 2 - 0, 4 - 0, 6 - 0, 8 - 0, 2 gdp employed cpix cpi gdp per employed - 1, 0 - 0, 4 - 0, 6 - 0, 8 - 1, 0 forecast horizon ( quarterly ) sources : statistics sweden and the riksbank figure 10. mean error for forecasts, an annual rate percentage points 0, 80 0, 80 0, 60 0, 60 0, 40 0, 40 0, 20 0, 20 0, 00 0, 00 - 0, 20 - 0, 20 - 0, 40 - 0, 40 - 0, 60 - 0, 60 - 0, 80 - 0, 80 gdp employment cpix cpi gdp / empolyment forecast horizon ( quarterly ) sources : statistics sweden and the riksbank figure 11. ranking for gdp following year per cent note. the y - axis shows how large a percentage of times analysts have been better than the percentage of