secondly, it concerns the special contagion risks in the financial system. in a central bank context, these are usually called systemic risks. banks and other intermediaries in the credit market who receive deposits from the general public play a central role in the financial system. they contribute, for instance, to facilitating the mediation of capital by acting as intermediaries between depositors and borrowers. they also create the conditions for more efficient mediation of payments in the economy. the banks ’ deposit accounts are of central importance for the use of payment cards, credit cards and credit transfers. many banks also participate in the system for the settlement of large - value payments supplied by the central bank. the banks and their account systems are therefore a vital part of the payment system. so if anyone asks why the banks are special, i could reply in the same way as john dillinger, designated by the fbi in the 1930s as public enemy number one, when asked why he robbed banks : “ because that ’ s where the money is. ” at the same time, problems that arise in one bank can easily spread to other banks. this spread can occur in different ways. firstly, there can be a direct spread, through the exposures the banks have to one another in the payment systems and in connection with foreign exchange and securities trading. severe chain effects can arise if the customers of a bank suffering problems have their means of payment tied up in the bank. this makes it difficult to make payments to other households and companies. it can lead to liquidity problems that can in turn give rise to loan losses and payment problems for these customers ’ banks. secondly, the banks are often exposed to the same sorts of risk. this increases the probability that, for instance, a macroeconomic shock may affect more than one bank. the spread of problems between banks can thus also arise as an indirect effect, through expectations that other banks may suffer similar problems to the one first affects, or via more well - founded suspicions of the banks'exposures to one another. the contagion risks mean that problems in one bank can easily lead to problems for the entire bank system. the costs to society of a crisis affecting the entire bank system can be substantial. it is, of course, difficult to calculate these costs. some surveys have indicated that an average production loss resulting from a bank crisis could be around 15 - 20 per cent of gdp. according to some calculations, the collapse of the swedish bank market cost around 5 per cent

. the uncertainty has led to an increase. but, there are also other parallels. this includes in particular the arrangements that made the banks ’ real risk - taking more abstruse. the banks ’ formal and informal promises of loans to special investment vehicles meant that the problems quickly bounced back into the banks'balance sheets. in the swedish bank crisis one can say that the finance companies in some respects played a corresponding role to the special vehicle. it was the finance companies that primarily financed the expansion in the construction and property markets. the finance companies largely financed themselves in the short term by issuing so - called commercial papers in the fixed income market. when the property market folded, it was a finance company, nyckeln, which in september 1990 was the first to throw in the towel when it could not renew its financing. other finance companies then followed suit. many of the finance companies were owned by the banks. and the banks were tied by both formal and informal commitments. the losses therefore soon returned to the bank system. in 1991 it became apparent that the banks had substantial problem loans through their exposures to the property branch both directly and indirectly through the finance companies they supported. the bank crisis had become a reality. perhaps you begin to see a pattern now? the structures were a side - effect of the desire to avoid regulation it is also interesting that the abstruse structures, which led to the current financial turmoil and the bank crisis in the 1990s, were in both cases partly due to so - called regulatory arbitrage. the most recent wave of securitisation of the banks ’ credit portfolios was partly propelled by deficiencies in the capital adequacy rules. through securitisation the banks could easily avoid a lot of expensive capital adequacy. since 2004 a new capital adequacy regime, basel ii, has applied. this is more finely meshed and does not allow the same possibilities to avoid capital adequacy through securitisation. however, it has not yet been implemented in all countries, such as the united states, for instance. the swedish finance companies were in their day the result of regulatory arbitrage. prior to the abolition of credit regulation in sweden, the finance companies were often used as a means for the banks to get round the credit restrictions. this “ grey ” credit market was once substantial and an important source of additional income for the banks. around 25 years ago i myself wrote quite a lot about this. credit