stefan ingves : challenges for the design and conduct of macroprudential policy speech by mr stefan ingves, governor of the sveriges riksbank, at the bank of korea – bank for international settlements ( bok - bis ) conference on macroprudential regulation and policy, seoul, 18 january 2011. * * * the last three years have been a challenging time for central bankers and policy - makers. and yet significant challenges lie ahead. the crisis exposed gaps in the existing regulatory frameworks and raised questions about previously accepted beliefs and practices. we are still trying to understand the key lessons from the crisis so we can determine the reforms to the financial systems, regulatory structures and policy instruments that are needed to enhance financial stability in the future. but it is clear that a major element of these reforms will be the development and implementation of effective macroprudential frameworks empowering some form of agency to identify system - wide risks to financial stability, and providing the instruments to prevent and mitigate those risks. of course, while the reforms are being developed and implemented, we must rely on the existing framework and instruments to support the fragile recovery of the real economy and financial system. sweden ’ s economy is recovering but vulnerabilities remain strong swedish recovery from the crisis as in many countries, gdp fell sharply in sweden as a consequence of the financial crisis. but sweden is now experiencing a relatively strong economic recovery ( see figure 1 ) and the swedish banking sector appears resilient. figure 1 : development of gdp in selected countries and regions quarterly changes in per cent, annual rate, seasonally adjusted data. sources : bureau of economic analysis, eurostat, statistics sweden and the riksbank ( monetary policy update, 15 december 2010 ) bis central bankers ’ speeches swedish banks ’ access to market funding, which was disrupted after the failure of lehman brothers, has recovered sufficiently to enable the riksbank to withdraw the extraordinary lending it provided during the crisis. 1 in addition, the four largest swedish banks, which have a combined market share of about 75 %, are well capitalised. indeed, the riksbank estimates that, by the end of 2011, they will already have sufficient resources to meet the forthcoming basel iii capital requirements, including the capital conservation buffer and a fullscale counter - cyclical capital buffer, without undertaking any exceptional capital raising exercises ( see figure 2 ). 2 figure 2 : estimated common equity tier 1 capital ratios for the four largest swedish banks sources : bank reports

the labor market population by age group labor force participation rate by age group mil. persons 100 % 65 - 74 20 - 64 0 - 19 75 - 70 - 74 65 - 69 60 - 64 55 - 59 50 - 54 45 - 49 40 - 44 35 - 39 30 - 34 25 - 29 20 - 24 15 - 19 cy 1995 age group notes : 1. in the left - hand chart, figures are based on the population pyramid for japan released by the national institute of population and social security research. 2. in the right - hand chart, figures are based on the labour force survey ( 2022 ). sources : national institute of population and social security research ; ministry of internal affairs and communications. ii. the present : changes in the wage and price situation and the bank's thinking on the conduct of monetary policy chart 7 changes in price - setting behavior firms'outlook for output prices in the tankan manufacturing nonmanufacturing 5. 0 chg. from the current level, % 5. 0 4. 5 4. 5 4. 0 4. 0 chg. from the current level, % economists 2 ( 7 to 11 years ahead ) firms ( 5 years ahead ) 3. 5 1 year ahead 3. 0 5 years ahead 3. 0 5 years ahead 2. 5 2. 0 2. 0 1. 5 1. 5 1. 0 1. 0 0. 5 0. 5 0. 0 0. 0 1. 5 1. 0 0. 5 - 0. 5 cy 14 households ( over the next 5 years ) 2. 0 1 year ahead 2. 5 y / y, ann. avg., % 2. 5 economists 1 ( 6 to 10 years ahead ) 3. 5 - 0. 5 cy 14 inflation expectations 0. 0 cy 05 note : in the right - hand chart, " economists 1 " shows the forecasts of economists in the consensus forecasts, while " economists 2 " shows the forecasts of forecasters surveyed for the esp forecast. figures for households are from the opinion survey on the general public's views and behavior, estimated using the modified carlson - parkin method for a 5 - choice question. figures for firms show the inflation outlook of enterprises for general prices ( all industries and enterprises, average ) in the tankan. sources : bank of japan ; jcer, " esp forecast " ; consensus economics inc., " consensus forecasts. " ii. the present : changes in the