the excessive deficit procedure ( edp ) attached to the treaty states that member states shall ensure that national procedures in the budgetary area enable them to meet their obligations. it would therefore be in the spirit of the treaty to have eu countries commit themselves to establishing these kinds of bodies. independent forecasts would avoid having unreliable deficit figures before elections, only to “ discover ” the real state of accounts after the vote – such as has been the case in portugal, france, germany, and hungary and most spectacularly in hungary and greece. happily, there have been some improvements in some member states since the pact was reformed in march 2005. if they had a similar role to the congressional budget office in the us, the bodies would ensure a reliable and unbiased “ reality check ” in times of fiscal profligacy. at best, the advisory bodies would create a continuous national dialogue with warnings and recommendations to politicians that would boost transparency and put long - term fiscal goals at the heart of the debate – a reinforced version of the process that has helped denmark, finland and sweden to improve fiscal soundness. the experience of central banks is that transparency and goals help form expectations and behaviour, enlisting the public in the struggle for macroeconomic soundness. after a while, the discipline that initially seemed practically unattainable becomes almost natural.

##cy requirement for banks by the amount currently being discussed. if one wants to influence household indebtedness, changes in the tax relief would have greater potential to directly affect households ’ incentives. uncertain what effect the mortgage cap has there is also some support for the mortgage cap having an effect on the loan appetite from the preliminary evaluation made by finansinspektionen after the introduction of its mortgage cap in october 2010. 20 the mortgage cap is not a cap in the total sense, but it means that a person who wants to borrow a large amount must take a larger share of unsecured loans, which usually have a higher interest rate than first loans and moreover have to be amortised at a faster rate. of course, not all households are affected by changes in the mortgage cap. say that the mortgage cap is reduced from 85 to 75 per cent. and say that the standard households are affected by this and must therefore take on a larger share of unsecured loans at an interest rate of 6 per cent and moreover pay off the unsecured loan over 10 years. this would entail increased interest expenditure corresponding to between 0. 4 and 1 per cent of disposable income, and amortisation corresponding to between 2. 8 and 7 percent of disposable income. the total increase in expenditure in this example thus corresponds to between 3. 2 and 8 per cent of disposable income. this is comparable with how much household expenditure would increase if the mortgage rate instead increased by just over 1. 9 percentage points. amortisation as a form of saving many of you will know that regulations of this type have often been circumvented in various ways. one way for the banks to make the mortgage cap less binding for their customers and enable them to take on more loans, for instance, is not to require amortisation on first loans. when it comes to amortisation culture, we in sweden differ quite substantially from what seems to be common in many other countries. in sweden, around 40 per cent do not amortise at all. of those who do, a good 40 per cent do it in such a way that it will take 50 years or more before they are free of debt. let us imagine that our households – which we assumed did not amortise at all to begin with – are forced to amortise their loans over a period of 50 years. if the households began to amortise in this way