the risk weight. bis central bankers ’ speeches sectors. and in this way it should be possible to steer the banks ’ lending away from the mortgage market. we at the riksbank are currently investigating what operational and technical requirements need to be met to launch a minimum reserve requirement for this purpose. whether or not we then use the minimum reserve requirement would depend, of course, on the results of the investigation, but also on future developments in the mortgage market. it is in any case within the riksbank ’ s mandate to introduce a minimum reserve requirement, and the risks rising from a credit expansion in the mortgage market fall within the riksbank ’ s area of responsibility. better management of systemic risk at the same time, there is a need to revise and clarify the division of responsibility between the authorities so that we become better at managing the type of problem we now see in the mortgage market. i am now talking about measures that are needed in the longer run. a central issue concerns the current hesitation over which authority should deal with a runaway development in the mortgage market. the government has a role to play here, of course. but so do finansinspektionen and the riksbank, because we are the first natural “ line of defence ” as public authorities with the task of managing this type of problem. unfortunately, it is at present unclear exactly which one of us is responsible for what. as you know, we have our own respective areas of responsibility. finansinspektionen focuses on the supervision of individual financial institutions and upholds consumer bis central bankers ’ speeches protection, while the riksbank is responsible for price stability. but there is also some overlap. both finansinspektionen and the riksbank oversee the financial system and try to prevent financial crises. but we do this for partly different reasons, as we have different tasks. the risks now building up in the mortgage market concern individual banks. but risks are also building up that threaten financial stability – what are known as systemic risks. ultimately, the macro economy may also be affected. this means that the division of responsibility is unclear. the problem with the division of responsibility can be illustrated as follows. if we assume that the trend in household indebtedness and housing prices does not slow down, despite all efforts, and continues at an alarming pace. which authority should be the first to take action and on what grounds? is it a question of consumer protection or of

. the adjustments would be relatively minor. a more detailed description of the basel iii regulations and the riksbank ’ s view of them can be found in the speech by stefan ingves on 2 february 2011 – “ basel iii – much - needed regulations for a safer bank sector ”. bis central bankers ’ speeches but it is not just a question of when the regulations should be introduced. it is also a question of the levels for the capital adequacy requirements, which will be higher than currently agreed levels. they will include the cyclically - based capital requirement now being prepared, and which is expected to be in the interval of 0 to 2. 5 per cent. they will also include the extra capital requirements that large banks that constitute a particular risk to the financial system will need to fulfil. the four major swedish banks are systemically - important in the nordic - baltic region and will most likely be covered by these rules. in total, thus, the capital requirements will be raised. in addition, these are minimum requirements and there is nothing to prevent countries from voluntarily choosing higher levels if they consider it necessary. further regulation in specific areas where swedish banks are particularly vulnerable may also be necessary. here i am mainly referring to the swedish banks ’ extensive market funding, particularly from abroad, which i discussed earlier. and which has in many ways enabled the expansion in the banks ’ mortgage stocks. there is international work on producing new regulations in this area, too. when the work regarding the technical details for liquidity regulation is complete, we must also decide how and when the regulations should be introduced in sweden, taking into account the structure of our financial sector. don ’ t forget the supply side in talking about the housing market i have mostly talked about the demand side and how we can ensure a balanced development there. this is what much of the general debate has concerned. but i would like to conclude with some words on the supply side, or housing construction, and what role this plays and has played earlier. while this is something that is fairly often discussed in this context, i nevertheless feel it deserves a little more attention. one of the explanations usually put forward for the high housing prices is that relatively little new housing has been built in the past fifteen years or so ( figure 4 ). the low level of construction is what is usually termed a “ fundamental explanation ” of the upswing in house prices. and this is probably true. but i also feel there is reason to ask how fundamental,