compete in the international bond market. if one is to borrow on the balance sheet, it must naturally be in such a state as to be accepted by the lenders. the swedish institutions have managed this by strict operating rules, which place limits on what the institutions may engage in and allow lenders to ensure that the institutions get involved in what they have said they are going to do and nothing else. however, a not inconsiderable risk capital or guarantees from the owners have also been required. capital adequacy in the swedish companies is shown in figure 3. if – or rather when – the owners ’ requirements for return on the capital contributed increase this can be problem. mortgage banks capital ratio and tier 1 capital ratio 1998. per cent capital ratio tier 1 capital ratio • handelsbanken hypotek 10, 7 10, 0 • stadshypotek 13, 1 12, 7 • spintab 16, 0 11, 1 • sbab 10, 6 6, 9 • nordbanken hypotek 10, 5 8, 8 • s e b bolan 8, 4 4, 3 during the financial crisis in sweden, the balance sheets were for obvious reasons insufficient to enable the institutions to borrow at competitive prices in the international market. this uncertainty on asset values was all too great for a while. since then, however, creditworthiness has been continually increased, which is reflected in a gradually improved international rating. the swedish housing loan institutions have today around 13 % of their borrowing abroad. traditionally the swedish insurance companies and pension boards have been large purchasers of housing institution bonds. a part of the international borrowing has taken place in europe, in particular in london, while the major part has originated from investors in the usa and japan. an interesting issue is whether the ability to borrow in euro will make the central european investors more interested in swedish risks than before? it remains to be seen. however, obtaining capital in the international market is a laborious and long - term work that requires a systematic build - up of confidence. every new lender must become acquainted with the borrower ’ s name and history and eventually request a limit in his board. this takes time and the process is not simplified by a common currency. with regard to building up the international investment base, the swedish housing credit institutions have perhaps had slightly different approaches and priorities. having a well - established network of contacts among the european investors is surely not a bad idea the day that the

##s and notified that it intends to raise this, which in practice will increase the banks ’ costs for mortgages. the swedish bankers ’ association ’ s recommendation to draw up amortisation plans in line with finansinspektionen ’ s notified requirement may also have an effect. 14 nor is there any shortage of ideas for further measures, including the introduction of countercyclical capital buffers, which they now use in norway. underneath all this is a problem of a more structural nature, namely a supply of housing that has grown slowly and a housing market that is not functioning efficiently. this has most likely contributed to pushing up the price of housing and consequently indebtedness. neither monetary policy nor measures in the field of macroprudential policy can resolve this type of structural problem ; they must be managed with entirely different measures. do marginal differences in the repo rate play a role? in the same way as one can question whether a repo rate that is a few tenths of a percentage point higher or lower plays any role with regard to risks linked to household indebtedness, one can also question whether it has any significance for inflation and unemployment. during the period between december 2012 and december 2013, when the repo rate was unchanged at 1 per cent, i advocated interest rate cuts of 0. 25 percentage points. is it reasonable to believe that such a small cut would have any tangible effect on developments? of course, we cannot know with any great degree of certainty what would have happened if monetary policy had been different than it was, but we can use economic and statistical models to assess the consequences. an analysis using the riksbank ’ s macro model ramses15 indicates that a repo rate that was 0. 25 percentage points lower during most of 2013 would have meant that inflation would have been a couple of tenths of a percentage point higher today ( see figure 5 ). this may not seem much, but it corresponds approximately to the downturn in inflation we have observed since the start of 2013 and these are important tenths of a percentage point in a situation where inflation has already been low for a long time. 16 the effect could be greater if one took into account the fact that a lower repo rate in 2013 would probably have affected expectations of future monetary policy during 2014 and onwards. moreover, i was not merely advocating a lower repo rate, but also a lower repo - rate path during this period. a lower repo - rate