much about the future, of course. and as i mentioned at the beginning, i shall not make any overall assessment of economic developments here today ; i shall wait until the executive board ’ s next monetary policy meeting at the beginning of september. i will now go on to describe how the riksbank, and i personally, viewed monetary policy at the most recent monetary policy meeting at the end of june. swedish monetary policy following the financial crisis, monetary policy in sweden has been aimed mainly at moderating the depth of the economic recession that came in the wake of the crisis. the repo rate has been held at an all - time low of 0. 25 per cent for a whole year. the riksbank has also provided the banks with more liquidity than normal, through a number of extraordinary measures. however, for some time now the situation has been such that we could begin to normalise monetary policy, and now in the final part of my presentation i shall describe in more detail our reasoning at the most recent monetary policy meeting. normalisation of the repo rate in july we raised the repo rate from 0. 25 to 0. 50 per cent. i agreed with the picture of economic developments painted in the most recent monetary policy report and supported both the proposal to raise the repo rate by 0. 25 percentage points and the repo rate path described in the report. but i also pointed out that we must be prepared to reconsider the direction of our monetary policy, if developments abroad turn out to be much weaker than we have expected. ( figure : repo rate ). back in april we were expecting to need to raise the repo rate either in july or september. we later had to make a substantial upward revision to the forecast for gdp growth this year, at the same time as the forecasts for inflation and wages remained largely unchanged. this pointed towards raising the repo rate in july rather than waiting until september. but, despite the fact that the forecast for gdp growth in 2010 had to be revised up substantially, we were nevertheless expecting resource utilisation to remain low for most of the forecast period, and inflationary pressures to be modest. this pointed towards the repo rate needing to be held at a lower rate than normal over the coming period. however, our joint assessment was that we ought to ease up on the accelerator and gradually raise the repo rate towards a more normal level, as resource utilisation increases. i also felt it was reasonable

did the basis spreads and the cds premiums for banks in the four countries concerned, although they have risen again in august and the levels remain higher than they were in the spring. however, during the summer the countries affected have managed relatively well in issuing government bonds, and the banks ’ interim reports have been positive. the european central bank has been able to reduce both its purchases of government bonds and its lending to the banks. the general picture is, to summarise, that the unease in the financial markets has been subdued during the summer, at the same time as the situation is still not normal. from this international perspective i shall now move on to a national one, and take a look at economic developments in sweden. economic developments in sweden at the beginning of this presentation i summarised the picture of developments in sweden painted in the riksbank ’ s monetary policy report. the swedish economy is developing strongly following the severe downturn. gdp was expected to grow relatively quickly over the coming years, and the labour market was expected to improve. inflationary pressures are currently low, but are expected to increase as resource utilisation rises. i will now describe developments in the swedish economy in a little more detail, and at the same time discuss new information received during the summer. somewhat simplified, one can say that a cds is a contract where the buyer pays the seller a premium for the seller to take on the credit risk linked to an underlying asset, such as a bond. the premium then becomes a measure of the credit risk. for the banks to manage the stress test their tier 1 capital ratio, that is, their tier 1 capital in relation to their risk - weighted liabilities, must not fall below 6 per cent. in the stress test the major swedish banks were calculated to have tier 1 capital ratios of 8. 9 – 10. 3 at the end of the test period. strong gdp growth the riksbank ’ s monetary policy report from july forecasts relatively high gdp growth in the coming years : that swedish gdp will grow by 3. 8 per cent this year, and then by on average just over 3 per cent a year in 2011 and 2012. ( figure : gdp growth ). we could also note that the first quarter of the year had been better than expected. it is particularly pleasing that the upturn was on a broad front – all of the components of gdp contributed to the upturn. moreover, the riksbank also saw good opportunities for a continuing recovery.