, the banks ’ mortgages were given a risk weight of 50 per cent. a bank ’ s risk - weighted assets were then calculated by multiplying the value of the respective type of asset by the respective risk weight. basel i meant that the banks should have capital exceeding eight per cent of the bank's risk - weighted assets. this requirement still applies, although the content of both the banks ’ capital and their risk - weighted assets have changed over time. basel ii and iii entailed more risk - sensitive capital requirements and increased model risks at the beginning of the 1980s, several countries deregulated parts of their credit markets. as a result, the banking systems in many countries rapidly became more complex and even more internationally interlinked than before. new types of more complex financial instrument were introduced. moreover, new and more advanced methods for measuring risk and risk management were developed and refined by most of the banks. many agents, including the basel committee, assessed that basel i needed to be reworked to become more risk - sensitive and to better reflect developments in the banks and in society. the banks were keen on pushing this question as they wanted to use their own methods for calculating capital requirements. in 2004, the so - called basel ii accord was published. this regulatory framework was incorporated into swedish law and in many other countries at the beginning of 2007. one of the main differences with regard to basel i, was that basel ii made it possible to apply different methods to calculate risk - weighted assets and capital requirements. as you probably know, some banks were able, after approval by the financial supervisory authority, to use so - called internal models to calculate their risk - weighted assets. this reform was intended to increase the link between the banks ’ capital requirement and their actual risks, which was also largely the case and thus generally improved the banks ’ risk management. 4 however, the use of internal models also entailed a risk that the banks ’ calculation of the capital requirements would not reflect the actual conditions. the risk that the banking system would not have sufficient capital to manage the risks arising from the banking operations thus increased. as the banks themselves were given the opportunity to influence their capital requirements, their incentives to underestimate the risks and thus reduce the capital requirements, increased. it is also difficult to determine how much capital a bank actually needs to manage a crisis situation. soon after the basel ii accord had been reached, the major international financial crisis broke out with the bankruptcy of the us bank lehman

stagnation... research provides several different explanations for the falling trend in global real interest rates. 3 the explanation that has probably received the most attention recently is the theory of secular stagnation, developed by the american economist lawrence summers. 4 according to him, weaker global demand and lower growth, which can be long - lasting, lie behind the low level of interest rates. the weak demand is, in turn, due to various structural factors that have led more people wanting to save and fewer wanting to invest. both of these parts tend to push the real interest rate down. demographic factors may provide an explanation for why the willingne ss to save has increased. average life expectancy in the population has risen in both developed countries and emerging economies in recent decades. this may lead more people to wish to save for their old age. in a lifecycle perspective, saving is highest in middle age, when most people ’ s earnings are highest and they are very motivated to save prior to retirement. so the greater number of middle - aged people today may thus provide an explanation for the increase in saving. if the saving is intended for future retirement, one effect of the falling real interest rates may also be that many people need to save even more to reach their saving targets. another explanation for the increase in saving, particularly during the 2000s, has been put forward by the former chairman of the federal reserve, ben bernanke. 5 according to him, the increase in saving that occurred in china and other asian 3 see fischer ( 2016 ), sveriges riksbank ( 2017a ) and rachel and smith ( 2015 ) for an attempt to quantify the significance of the various explanations. 4 see summers ( 2014 ). 5 see bernanke ( 2015 ). 7 emerging economies, as well as in the major oil - producing countries, contributed to the downward pressure on interest rates. this is because the large current account surpluses in these regions have been invested on the global capital markets, resulting in low real interest rates. the falling trend in real interest rates may also be due to a reduced willingness to invest. in an article that has attracted much attention, the famous american economist robert gordon claimed that the pace of innovation has declined sharply since the 1970s. 6 in his opinion, growth between 1870 and 1970 was abnormally high thanks to relatively simple and growth - promoting innovations, such as electricity and the combustion engine. according to gordon, it will not be possible to repeat this growth as today