stimulate future productivity growth. following the electricity euphoria at the beginning of the 20th century, various applications gradually changed everyday life for industry and households. sweden was not fully electric until a few decades later. essentially, therefore, i am optimistic with regard to what future applications in telecommunications and it can achieve for economic growth. the financial sector - the lubricant of the economy the financial sector has played a very central role in the development of the economy over the past 150 years. it still does, although the general public is sometimes critical of the financial sector - often without considering the services the sector has to offer and how daily life would look without this sector. the fundamental functions of the financial sector - financing, risk management and intermediation of payments - are indispensable to society. financing entails bringing together the different wishes of savers and investors. savers want their money to be available directly, while investors often require long - term loans. these opposing wishes can be reconciled via banks, and also directly via the financial markets. the latter assumes that there are well - developed secondary markets with a large turnover in, for instance, equity. this enables companies to borrow long - term while savers can quickly sell their shares if they so desire. risks are managed through the spread in borrowing, but also by transferring them, against payment, to others in the financial market. the spread and redistribution of financial risks enables investments to be made that would not otherwise have been possible. the third and final main task is the intermediation of payments, which enables payment to be smoothly made and received for goods and services sold either in the conventional manner or via, for instance, the internet. in countries like sweden we tend to take it for granted that these functions work. however, if we try to imagine that they did not exist, we will realise how extremely central they are to the functioning of the economy and to our welfare. if we imagine a country where savers and investors did not have access to functioning and reliable banks and financial markets, it is easy to see how this would hamper development. the effect would be a tendency for savings to move abroad, while profitable investment projects did not get off the ground in countries with an undeveloped financial sector. if we look back at the 1950s, we can see that the intermediation of payments functions much more smoothly today. then, we used to stand in line to receive a pay packet, life assurance employees bicycled round to customers ’

lending to the swedish household sector and are also closely interlinked in that they have similar exposures. the major swedish banks fund about half of their operations on the capital markets of which a substantial part is in foreign currency. in simple terms this means that more than one of bis central bankers ’ speeches every two krona that are lent to swedish households is ultimately governed by conditions that are set by anonymous capital managers in sweden or elsewhere in the world. moreover, approximately half of the banks ’ funding consists of covered bonds which are partly held by foreign investors and partly by the other major swedish banks. all in all, this means that developments on the mortgage market in sweden are not only important to individual banks but also to the banking sector as a whole. if the providers of the banks ’ market funding were to lose confidence in the banks, or in the situation on the mortgage market, the price of funding could increase and access to funding decrease. this would entail higher interest rates for households and perhaps also for companies, depending on the ability of the banks to parry such a situation. it is therefore vital that our financial system is resilient and inspires confidence, and that the development of household debt is deemed to be sustainable in the long term. we are in a situation in which the development of debt in sweden and the swedish mortgage market are not only matters of importance to us here in sweden but also to international investors. we need measures, and the possibility to follow them up, to ensure a system that is sustainable in the long term as i said earlier, the new data means that we have taken several further steps towards seeing the risks associated with household debt. however, i would like it to make it clear that there is still a long way to go. we still do not have the entire picture. an important area where we need more data is the asset side, where we have information on the overall situation in the household sector but not broken down at the individual and household levels. in order to be able to follow developments it is of course also important to have long, continually updated time series. the analysis of the new data that we now have access to shows, all in all, that households in general are highly indebted in relation to their incomes, and this applies above all to low and middle - income earners. it also applies irrespective of where the borrowers live and how old they are. the analysis also shows that many borrowers do not reduce their debts