swedish housing market as early as in the spring of 2011. see sveriges riksbank ( 2011 ), “ the riksbank ’ s inquiry into the risks on the swedish housing market ”. see “ how are household cashflows and consumption affected by rising interest rates? ” article in monetary policy report, december 2018. 7 figure 7. households have increasingly high debt and shorter interest - rate fixation periods household indebtedness has increased shorter interest - rate fixation periods for household mortgages variable fixed note. left - hand graph. percentage of disposable income. total household debt as a share of their disposable income, totalled over the past four quarters. right - hand graph. percentage of mortgages. refers to loans from mortgage institutions. percentage of mortgages in each category is calculated based on the value of the loans. variable rate refers to interest - rate fixation periods up to and including three months. fixed rate refers to interest - rate fixation periods over three months. sources : the riksbank and statistics sweden most households can continue to pay their mortgages even at significantly higher interest rates... the question is whether households ’ interest - rate sensitivity – in combination with rising interest rates – might result in them quite simply not being able to meet their interest payments. this could lead to banks incurring direct credit losses on their mortgages, which in turn might affect financial stability. but i am not overly worried about this risk. banks do what is known as a “ left - tolive - on ” or “ discretionary income ” calculation, as part of their credit assessment. as a rule, they don ’ t grant mortgages if there is a deficit in the calculation. the estimated interest rate they use in the calculation is on average around 7 per cent, which is some way above a long - term normal level, which can be assumed to be between 4. 5 and 6 per cent. 7 calculations done by the swedish financial supervisory authority, finansinspektionen ( fi ), on a sample of new mortgage holders show that only just over 5 per cent of households have a deficit in their discretionary income calculations if the mortgage rate rises to 7 per cent. 8 there is hence nothing to indicate that the household sector as a whole would encounter significant problems in paying their interest expenses even if interest rates were to rise substantially in relation to their current levels. and, as i said earlier, our forecast indicates

scandinavia all the time, where labor productivity is very high. it is important that we deal with all the challenges in education, the bureaucracy, infrastructure and more, in order to deal with the problem of low productivity. the supervisor of banks headed a team that presented important conclusions regarding reinforcing banking competitiveness. each time i would meet a senior banker from abroad, i would try to convince him to start banking operations in israel. i didn ’ t succeed, and since 2008, i have stopped trying since the crisis led banks to stop expanding their operations overseas. however, at the team ’ s recommendation, there are many steps whose implementation can help reinforce competitiveness in the banking system. bis central bankers ’ speeches defense expenditures increase from year to year, although their share of gdp continues to decline and has now reached its level from the beginning of the 1960s. still, defense expenditures are the largest component in the state budget. it is clear to all of us that we live in unsafe and uncertain surroundings. it is the government ’ s duty to protect its citizens, and there is therefore no alternative to large budgets for the defense establishment. this also has positive ramifications, such as the defense establishment ’ s contribution to the development of the high - tech industry. we do not have the luxury to think that we are sweden and to plan our expenses without needing to allocate about 5 percent of gdp to defense. we must continue to provide ourselves with defense, but the allocation of more money to defense is not the only solution. we must also try to find other solutions, and try to achieve a peace agreement with our neighbors, including with the palestinians. the phrase, “ there is no partner for peace ” is a self - fulfilling phrase. you need two for an agreement, and if we don ’ t want to look for a partner, we will remain in the current situation. we must look for the partners for peace. until we reach agreements, it will cost us more since we will need to reinforce our readiness. however, in the long term, we will benefit from it, and it will have positive ramifications in various areas. we must, therefore, find a way to act more proactively in order to stop the conflict that has continued here for far too long. bis central bankers ’ speeches