youth, who usually make up the greatest proportion of the unemployed. however, this sector has faced difficulties in accessing credit for working capital and expansion of their investments. mr chairman, even if more smes wished to modernise their plant and equipment, they would find it hard to do so because of the difficulty of obtaining financing. many banks choose not to provide credit to smes as they are perceived to be more risky and yet less profitable. some banks that might want to make such loans may lack the knowledge of how to make small loans and package them appropriately. the other challenge lenders have to work with in assessing smes for them to access credit is the lack of reliable data. for example, data on the share of bank credit to smes are almost non - existent in zambia. even in banks where credit data are available from credit registries, in most cases they do not include information about the size of firms. any estimates regarding the share of credit to smes have to rely on proxies, such as the size of loans. mr chairman, it is clear that lending to smes is different from lending to large firms. in the case of young firms, it is more difficult to acquire information. moreover, given the small size of the loans, it does not pay for the bank to undertake a detailed review of the creditworthiness of smes. thus, for sme lending to be profitable, banks must experiment with new approaches and technologies for risk assessment and loan management. such experimentation produces positive externalities by generating knowledge that is difficult for the bank to keep for itself, since trained agents can leave the bank to work with competitors. the other benefit we get from smes is that when there are adverse shocks in the market, their small size and flexibility allow them to speedily adjust to market changes. ladies and gentlemen, it is encouraging to note that, in the recent past, banks and non - bank financial institutions have expanded their provision of finance to smes, although there is still a lot of room for further improvement. we have recognised that a long - term strategy for smes calls for action across a wide range of policy domains, including education, research and development, financial sector regulations, competitive policies and a sound banking sector. these actions should address the need to create a healthier overall economic environment in which the business sector, smes in particular, operate. all key stakeholders should therefore strive to put in place smespecific policies and programmes

parts of the world, the recovery from the financial crisis has proceeded slowly and the financial markets are still marked by great uncertainty. this uncertainty is primarily linked to the fiscal problems in europe. the issues i have addressed today are not issues that have much to do with the current situation. instead, they are a few opinions on how the regulations for the financial sector should be changed to reduce the risk of new financial crises and to reduce the negative consequences for sweden if such crises should again arise internationally. in particular, i have addressed ways in which the riksbank could play a stronger role in this connection. thank you! my colleague lars nyberg has proposed that charges be introduced. bis central bankers ’ speeches