as a comparatively rich industrialised nation? what does the low level of capital formation imply for sweden ’ s chances of recapturing the leading position it had among industrialised nations at the beginning of the 1970s? it is important here to note that the structure of the business sector has changed. the industrial sector as a whole, including the basic industries, such as mining, ironworks and steelworks, and paper and pulp, have decreased as a proportion of gdp in favour of the expanding services industries. basic industries ’ share has fallen from 6. 5 per cent of gdp in 1970 to just over 4 per cent today, while service production in the business sector has increased from approximately 30 per cent of gdp to just over 40 per cent during the same period. we have therefore moved further and further away from capital - intensive production to production that is more dependent on human capital than heavy plant and machinery. another factor to take into account is the decline in housing construction, which has also contributed to the drop in the figures for capital formation. however, housing construction does not have the same importance for productivity growth as industrial investment, for example. this means that the dramatic decline in capital formation does not have to imply an equivalent fall in productivity growth. nevertheless, i still have the impression that we are focusing less on capital formation than before. this is indicated by the fact that structural change is currently relatively limited. the labour supply permit me now to discuss the other component that determines a country ’ s long - term growth capacity besides productivity, namely the labour supply. this is determined by the number of people in work and the number of hours they work. the number of hours worked rose during the years after the crisis at the beginning of the 1990s. this was partly due to greater demand for labour, to a rise in the working age population ( 20 - 64 years ) and relatively low numbers on sick leave. the trend in the number of hours worked has been broken in recent years, however. this is because the total number of people on sick leave has risen in sweden since 1997 - 1998. according to the most common measurement methods, sweden has the highest incidence of sick leave in the eu. there has also been an increase in work absence due to holiday and other leaves of absence as well as a decrease in overtime and additional working hours. meanwhile, the labour market has not made satisfactory use of the immigrant population in sweden. the employment rate among this group has been markedly lower than among native swedes. in addition,

lars nyberg : are the risks growing in the banking system? speech given by mr lars nyberg, deputy governor of the sveriges riksbank, at an analyst meeting at enskilda securities, held in stockholm, on 14 june 2000. * * * i would like to thank you for inviting me to today ’ s analyst meeting and giving me the opportunity to discuss financial stability issues with such a qualified audience. i would like to start by briefly explaining the riksbank ’ s analysis of financial stability. in addition to the inflation target, the riksbank has another primary task, namely that of being responsible for financial stability. these two important functions are closely linked. a stable financial system is important for price stability since financial imbalances can threaten the inflation target. likewise, an inflation target policy contributes to stability in the financial system, as it has a levelling effect on cyclical fluctuations. the riksbank ’ s analysis of financial stability can be interesting for analysts of bank and property shares, since we closely monitor the banking sector and property market within the scope of this analysis. our perspective is somewhat different, however, since we are mainly interested in risks which can threaten the stability of the financial system and which often appear to be relatively improbable, while stock analysts attempt to assess the most likely developments in the market. however, the information about the markets is largely the same and analysts also need to consider the risks in the companies which they are covering. after this introduction, i will then go on to discuss the strong credit expansion in sweden and the measures that a central bank can take if it assesses that this development constitutes a potential threat to financial stability. i will conclude by looking at international developments, since the development in sweden is by no means unique. the riksbank and financial stability the comprehensive changes that have taken place in the financial sector and the financial crises that have occurred in various parts of the world have meant that the work on securing financial stability has become increasingly prioritised. those countries which have undergone severe banking crises in modern times are now leading the way in terms of the work on financial stability. for example, sweden was the first country in the world to regularly and openly publish special stability reports analysing the situation of the financial system. we would say that the initiative was received with mixed feelings by other central banks, some of which were concerned that these kinds of reports would cause problems rather than preventing them. however, the attitude of the