, real estate or foreign assets. we are following these developments very closely, notably in relation to risks posed by asset valuations and the search for yield phenomenon. our assessment at present is that there is no sign of a general asset market overvaluation in the euro area. euro area equity prices are still recovering from the summer turmoil. prior to that, they had been fairly valued with a price - earnings ratio well below the values seen in the us. in the corporate bond markets, the increase in credit risk premia observed in the past few months has eased overvaluation concerns somewhat, with corporate spreads moving closer to their long - run averages. when examining excess bond premia, standard valuation models for euro area non - financial corporations point to fairly valued, or even slightly under - priced, corporate bond market valuations. term premia in sovereign bond markets are somewhat stretched, but this is a direct and desired consequence of the monetary policy action. as for the real estate market, the situation is quite differentiated across member states. there are growing signs that the recovery in property prices is becoming more broad - based across countries. in general, there is no evidence of generalised overvaluations, although some local developments warrant close monitoring. this situation in euro area asset markets couples with a still subdued credit cycle. while credit to the real economy is certainly recovering, all countries experience cyclical real credit growth rates below their long - term average. estimates of the credit - to - gdp gap, a measure of the deviation of credit from its longer run norm are negative for nearly all euro area countries and are below 10 % in most euro area countries. in other words, we are still far away from a situation of excessive credit growth and asset price misalignments – very different from a credit - driven asset price boom, which has preceded many financial crises of the past. the implication of this state of affairs is that at the moment, we do not see a need to implement broadly based area - wide countercyclical macroprudential policies, such as the countercyclical capital buffers. this is not to say, however, that selective measures to tackle risks emerging in specific parts of the financial system should not be taken. indeed, dozens of actions in the macroprudential field have already been taken by euro area countries, to increase the resilience of the banking system and to prevent the emergence of possible imbalances, in particular in the real estate sector. within

a higher percentage in relation to gdp in sweden than in the usa. 7. expenditure on information and communication technology advanced economies 1997, percent of gdp sweden australia united states united kingdom canada japan netherlands denmark france korea belgium finland norway ireland germany austria portugal italy sources : oecd analytical data bank and oecd information technology outlook 2000 spain however, in the work on the riksbank ’ s inflation reports, there are factors that are easier to pick up. one is of course the fall in computer prices. prices have fallen by almost 35 % a year since 1996. there is even an element of “ new economy ” in the deregulation of the telecommunications and electricity markets. firstly, it would not have been so easy to implement the deregulation without the aid of the new technology. secondly, the deregulation might not have had the same impact without, for instance, the information provided on the internet, which helped consumers in making a choice. all in all, i can allow myself to make a qualified guess on some areas, without knowing for certain : 1. productivity, total factor productivity, has risen considerably in sweden during the latter half of the 1990s. the emergence of information technology has probably been significant in this. 2. the effects will continue to be felt for a number of years, probably beyond the monetary policy horizon, for which reason the riksbank will continue to monitor the it phenomenon in future. 3. deregulation and increased competition play a special role in sweden, particularly as they have run parallel to it developments. at the same time, there is reason to point out that the “ new economy ” does not constitute a guarantee for a stable and positive development in asset prices, either in the usa or sweden. on the contrary, history shows that rapid technological changes often lead to speculative bubbles. this was the case after the emergence of the railway at the end of the 19th century and the crash of 1929 followed on from the breakthrough of electricity and the internal combustion engine at the beginning of the 20th century. i do not intend to make an in - depth analysis of the causes here, but to point out that even very promising developments in the growth of productivity can live up to the profit expectations created during speculative bubbles. monetary policy implications it is evident that large, it - driven and it - supported structural changes are underway and that these affect productivity and price levels in a way that needs to be taken into account when assessing inflationary pressure in the economy. we do not know