economies of scale and synergies. the second argument is that there is no evidence that conflicts of interest between the parts of our swedish banks conducting investment banking activities and the traditional lending activities have led to abuse. one can, of course, speculate as to why abuse of this type of conflict of interest does not occur in sweden in the same way as in the united states. i have no clear answer to that. however, there are a couple of institutional differences. share issues in sweden have rarely been guaranteed or syndicated in the same way as they are in the united states. the role of the swedish investment banks in share issues has therefore often been less comprehensive than that of their us counterparts. this may have limited the problem. another institutional difference is that the bank market is more concentrated in sweden. this may make the banks more anxious of their credibility than us banks are. if a swedish bank were to pass on its own credit risks to investors in a share issue, there is a greater risk that this would seriously damage the bank ’ s credibility. the number of large swedish investors is fairly small and it would quickly become known if anyone felt they had been cheated. the incentives to exploit a conflict of interest have quite simply been much lower here than in the united states. this does not necessarily mean that swedish bankers are more honest than american ones, just that the advantages of exploiting conflicts of interest are less and the costs are greater. my second conclusion is that it is important that all significant conflicts of interest should be discussed openly and publicly. there are justifiable claims for reliable information on borrowers and issuers, but the same applies to information on the measures taken by the banks to avoid exploiting conflicts of interest. i believe that there are relevant market solutions in most cases, as long as the conflicts of interest are clear. thirdly, i would like to encourage the swedish banks to carefully follow international developments within the field of compliance - i. e. the routines to ensure that internal and external rules are adhered to. in many cases the requirements have become much more stringent in recent years, and it is important to thoroughly assess developments in other countries. for instance, the chinese wall has been repaired in the united states, and is now higher than ever. this has been achieved through legislation. it remains to be seen whether the swedish banks can solve these problems themselves. fourthly, i believe that the supervisory authorities play an important role with regard to identifying and overseeing potential conflicts of interest

stephen s poloz : release of the financial system review opening statement by mr stephen s poloz, governor of the bank of canada, and ms carolyn wilkins, senior deputy governor of the bank of canada, at the press conference following the release of the financial system review, ottawa, ontario, 7 june 2018. * * * governor poloz : good morning, and thank you for being here today. senior deputy governor wilkins and i are pleased to be with you to talk about the latest issue of the bank ’ s financial system review ( fsr ), which we published today. let me quickly remind everyone about the purpose of the fsr — to identify key vulnerabilities in the financial system, which can interact with and magnify economic shocks. we monitor the evolution of these vulnerabilities, and then apply a set of risk scenarios to look at the potential implications for the financial system and economy if a significant shock were to occur. the main vulnerabilities that we see today are the same as those in the last fsr in november. i will begin with a few words about two of these : elevated household debt and imbalances in housing markets. these vulnerabilities are expected to persist for some time, although we have seen continued signs of easing. several factors are helping to lessen the vulnerability related to household indebtedness. importantly, there has been a series of changes to mortgage lending guidelines. we have also seen a slowdown in credit growth along with higher interest rates. as well, a solid expansion in the canadian economy is leading to strong growth in employment and income and, over time, this will support canadians ’ ability to manage their debt, even at a time of rising interest rates. the changes to mortgage lending guidelines are driving a steady improvement in the quality of new loans. we have seen a decline in the share of mortgages that have a loan - to - income ratio above 450 per cent. in fact, the share of new insured mortgages that have a ratio above this threshold has been cut in half since the middle of 2016. this is an important improvement, because we know that households with this level of debt are more vulnerable to an economic shock, such as a recession. however, i will point out two reasons for continued vigilance. first, because the total amount of debt carried by canadian households is so large, we know that it will be with us for a long time. second, it is still too