capital adequacy ratios or a reserve requirement. nor can an increase in the repo rate be ruled out if financial stability is threatened. however, these are more far - reaching measures and would only be used if the build - up of risk was assessed to constitute an acute problem. the assessment of the situation made by the riksbank and other authorities will always be marred by a large measure of uncertainty, as it is extremely difficult to evaluate how serious the build - up of risk actually is. if drastic measures are to be taken, the assessment must be based on a strong foundation. the development we can see today is, as i mentioned earlier, far from requiring any intervention. the riksbank ’ s assessment is that if the macroeconomic situation should worsen, it will lead to problems for individual households in meeting their payment obligations, but will hardly comprise a serious risk for banks in general and therefore not threaten financial stability either. in this context it is important to mention that the household sector normally accounts for a small percentage of loan losses, even during the banking crises. there is thus no reason in the current situation for the riksbank to resort to special measures to intervene against the build - up of debt currently occurring in the household sector. when discussing the banks ’ loan losses, i have alluded to the risk that households and companies will not be able to pay their loans. loan losses can also arise when the banks cannot meet the obligations among themselves. these risks are usually called counterparty and settlement risks. this type of risk arises in the banks ’ trading and taking positions in the financial markets. as the major swedish banks have extensive commitments to one another and also to foreign banks, problems in one bank can rapidly spread to the others and cause problems throughout the entire financial system. such a problem need not be due to a bank being insolvent ; it may be based on, for example, a failing computer system or similar. the riksbank has on several occasions pointed out that these individual exposures are a growing problem from the point of view of stability. to overcome this problem, the riksbank has begun a review of the regulations, together with the swedish financial supervisory authority. conclusion in the current situation there are great expectations that the future will bring economic growth and good times. “ the new economy ” with a low inflation rate and high levels of employment and growth has gradually crossed the atlantic to reach us. in such times of strong confidence in the future, consumption

for resource utilisation and inflation. however, we still anticipated that inflation would be in line with the target two years ahead. the conclusion drawn by the riksbank in august with regard to future inflation still largely stands, in my opinion. however, there may be reason for some upward revision to the inflation forecast made in may, and perhaps even to the one made in august. one factor which could indicate a higher inflation rate, at least in the short term, is the high oil prices. resource utilisation may also be slightly higher than anticipated in the coming years. one reason is the strong figures for swedish growth that we have seen over the summer. another is that fiscal policy will probably become more expansionary now. inflation can nevertheless be expected to be in line with the riksbank's target two years from now. this is also the picture painted in a speech by riksbank governor lars heikensten in london today. conclusion let me summarise what i have said this evening. despite stock market fluctuations and a periodically weak economic climate, both household indebtedness and house prices have increased substantially, on a national level, in recent years. there have been similar developments in many countries, and households ’ debts and interest payments as a percentage of disposable income are not remarkably high in sweden. although the debt ratio is approaching the high level prior to the financial crisis at the beginning of the 1990s, the low interest rates have meant at the same time that households'interest expenditure as a percentage of income has largely been halved since then. our calculations also indicate that households with debts on average have a relatively good safety margin for interest rate rises and reductions in income. we therefore do not at present envisage any major problems for the household sector as a whole, even if interest rates rise significantly. however, this does not mean that problems will not arise for individual households in the case of higher interest rates. it is important that borrowers include rising interest rate expenditure in their calculations and carefully consider what level of indebtedness they can manage when interest rates sooner or later begin to rise. for this reason, we have emphasised in connection with our monetary policy decisions over the past six months that interest rates are at present low in a historical perspective and will need to be raised in the long run. with regard to house prices, the calculations we have made so far do not indicate that prices for housing in the country as a whole are substantially un