euro becomes our own currency. it is interesting to note the rapid increase in swedish corporate bonds issued in euro during the autumn. the supply of government bonds has decreased which has led investors to look for other alternatives, but they have clearly become increasingly interested in assuming additional risk in exchange for some additional interest rate percentage points in the return. eriksson, volvo and now most recently birka energi are making company presentations at places in europe where few investors have previously shown interest. and birka can hardly be said to be a familiar name in the market outside sweden. this development should also include opportunities for the housing loan institutions. gilt - edged bonds if we wish to see how emu can affect housing finance, it is close to hand to study conditions in germany since these, together with the danish model of housing finance will be given special treatment in the ec directives in the area. in germany, housing loans are traditionally financed via so - called pfandbriefen, which are essentially housing bonds with a clearly specified body of collateral. as has been pointed out, the swedish housing companies finance the whole of their balance sheets without linking particular collateral to each loan issued. with regard to pfandbriefen, legal regulation moreover plays an important role for the nature of collateral and checks on the parts of the authorities. the government has had a committee of inquiry investigate how the so - called “ gilt - edged bonds ” could be designed in sweden and the legislation and supervision that should be required. in brief, this proposal means that the right of priority would apply to this type of bond, that clear limits would be introduced for the extent of borrowing against them ( at most 75 % for housing properties ) and that collateral would be identified in a special register controlled by finansinspektionen. the ministry of finance is at present considering its standpoint on these proposals. when the discussion on gilt - edged bonds was initiated in sweden at the beginning of the 90s, the background was concern that the new investment rules planned for the insurance companies would make it more difficult for the housing institutions to obtain finance. the requirements for diversification of assets would introduce stringent restrictions on the ability of the insurance companies to hold housing bonds. representatives of the industry claimed that considerable volumes of housing bonds would be sold by the insurance companies for this reason and that this would affect the market and increase costs for borrowers sharply. the gilt - edged bonds could at least partly solve the problem since, according

mr nyberg comments on how emu may affect the swedish housing loan market and its financing speech by mr lars nyberg, deputy governor of the sveriges riksbank, at foreningssparbanken in warsaw on 14 october 1999. * * * thank you for giving me the opportunity to come here and give some points of view on how emu may affect the swedish housing loan market and its financing. this is undeniably an issue which we have every reason to take an interest in whether we take part in the monetary union or not. one of the ideas with emu is to create a more efficient market for goods and services where competition is increasing and consumers obtain better products at lower prices. in the housing loan market, this should mean that borrowers expect a greater range of products, more suppliers and lower interest rates. how should the swedish housing loan institutions handle this challenge? competition for customers as we know, the national housing loan markets in europe look rather different, which is illustrated by the following diagram ( figure 1 ). in countries such as germany, denmark, sweden, the netherlands and the united kingdom, the total outstanding stock of loans with mortgages in property totalled over 50 % of gdp. in other countries, including greece and italy, the equivalent figure is under 10 %. the differences depend on factors such as the systems of rules, tax legislation and market structure which vary from country to country. housing finance has, as in sweden, often been an issue of great political interest, which is reflected in all the above factors. outstanding residential mortgage loans / gdp 1998. per cent % greece italy france spain belgium portugal ireland austria finland eu germany sweden uk netherlands denmark sourc e : emf 1998 it might be thought that standardised financial products such as housing loans should be very suitable for cross - border sales, but cross - border activity has been little to date. this is probably related to the housing loan market being primarily focused on private customers, who are difficult to reach without a local distribution network. it remains to be seen what internet can change in that respect. however, why should people not purchase a housing loan on the net, when they now pay bills and carry out other transactions that way. there are already today good possibilities for finding the cheapest housing loan on the market via internet, so technology will certainly increase transparency and competition even within the traditional more inert private sector. we are far from the time when swedish house owners waited respectfully for years to