the balanced development of the swedish economy. as i mentioned two days ago, housing prices and debts among households have increased heavily for a longer time. the rate of increase of household debts has far exceeded the rate of increase of incomes. if this development continues, imbalances may arise in the swedish economy over the long term. consequently, in this regards, the normalisation of the repo rate level may also contribute to promoting a stable economic development in the future. even if the development of sweden ’ s economy is favourable, it is naturally not risk - free. what risks can we see at present? firstly, the krona may appreciate more than we had expected. the assessment we have made is that the krona, to a significant extent, already reflects the high growth rate of gdp and the strong state of public finances, for example. however, i would like to point out that forecasts of exchange rates are always associated with significant uncertainty. it cannot be ruled out that the favourable development of the swedish economy has led many investors to reappraise their view of investing money in sweden. so could an excessively strong exchange rate form a problem? yes, it may form a “ problem ” in so far as demand for swedish exports will decrease and inflation may not increase in line with expectations, as imported goods become cheaper. should this be the case, it may not be necessary to increase the repo rate as rapidly. an alternative scenario in february ’ s monetary policy report examines this possibility. but let me clearly emphasise that the riksbank has no target for the level of the exchange rate. monetary policy is governed by the inflation target, even if the exchange rate is an important determining factor for inflation. secondly, as i mentioned, commodity prices have increased very steeply over the last year ( see slide 11 ). to a certain extent, although far from completely, this price rise has been counteracted by the appreciation of the krona. if commodity prices increase as a result of rising demand, this price increase will probably be more permanent than one resulting from supply shocks – that is factors obstructing output. 5 it seems likely that the strong economic development of the emerging economies – with increased demand for intermediate goods as a result – can largely explain the increase of commodity prices over the last year. the very recent unease in north africa has contributed to rising oil prices and has more of the character of a supply shock. all in all, the increase of commodity prices may

. deposit guarantee system a common deposit guarantee scheme can be seen as a completion of the banking union. the planning of such a scheme is still in a very early phase and would require harmonisation of the national schemes as a first step. the european commission is mandated to revisit the issue in 2019. but i assume that the european wide deposit guarantee system will be promoted earlier than 2019 since it would fit naturally inwith the ssm and the srm. a capital market union for europe following the initiation of the european banking union, commission president juncker promised in july 2014 to create a european “ capital markets union ”. as he explained it, “ to improve the financing of our economy, we should further develop and integrate capital markets. this would cut the costs of raising capital, notable smes, and help reduce corporations ’ high dependence on bank funding ”. last week, the european commission launched the action plan on building a capital markets union ( cmu ). the capital markets union is a good initiative. the ecb and the bank of england have already been active in some capital markets issues, especially reviving the eu market for a high - quality securitization. the cmu should help mobilise more capital in europe and especially channel it to financing of the corporate sector. by opening up a wider range of funding sources for investments the cmu can reduce the bank - dependency of european bis central bankers ’ speeches finance and thus the vulnerability of the eu economies and corporations to banking shocks. the cmu can also deepen financial integration and increase competition in the eu financial markets. conclusions : some enhancements ladies and gentlemen! to conclude, i would like to express some additional views on the banking union and the capital markets union, as i think that some enhancements would be needed. the capital markets union needs robust banks. the banking union was a major step in the right direction. the bu is mandatory for the euro area countries, while the other member states can join the bu on a voluntary basis. it is important to strive for an as unified approach to bank supervision as possible in the whole eu and including also the eea countries and others. this is so because banks are and will be of high importance for the sme financing, and the future playing field may not become quite level in the sme financing in the future capital markets union without some extra efforts. moreover, for ensuring financial stability and capital market integration, the bank - sovereignnexus has to be in