individual households are studied. here it can be added that it was not the household sector that caused problems for the banks during the financial crisis of the early 1990s ; despite the fact that the interest ratio rose to 11 per cent in 1991 and unemployment peaked during 1993 at 8. 5 per cent. with regard to developments in house prices, the assessment is still that swedish house valuations are relatively reasonable. fundamentals such as rising disposable incomes and falling interest costs could to a large extent explain the observed price trend. the demand for housing is expected to grow more rapidly than the supply. however, developments in house prices in sweden vary considerably from region to region. prices in metropolitan regions have risen by a significantly larger amount than for the country as a whole, although prices in the stockholm region have stagnated over the past two years. there has also been a steeper price rise for tenant - owned apartments than for single - family dwellings. it is difficult, at present, to envisage any tendencies towards imbalances that could lead to a substantial fall in prices. some form of unforeseen event, such as changes in regulations or macroeconomic shocks, would probably be necessary to cause prices to fall sharply. the fact that interest rates will rise in the long term should be included in household expectations and can hardly be regarded as an unforeseen event in any economic scenario. the market for apartment buildings has also been characterised by rising prices since 1994. regulations such as those on utility value, and the system of central rent negotiations, normally leads to stable, even developments in the prices of apartment buildings. however, the conversion of rental properties into tenant - owner associations has resulted in recent years in relatively sharp price rises for apartment buildings. price developments can, of course, be affected by changed conditions such as a substantial increase in new construction or a rapid decline in demand. however, a low level of housing construction and a high demand for housing, particularly in metropolitan regions, indicates that this will not be the case. conclusion the riksbank ’ s work on monetary policy and financial stability emphasises the importance of transparency, clarity and predictability. these are also important factors in the securities markets in which mortgage institutions are active. i hope that mortgage institutions ’ own actions, coupled with the new legislation, will help to render the market for housing finance more efficient.

. the interest rate at which it provides in the liquidity needs of the banks. in such a framework there is no target for the exchange rate of the rand. the external value of the rand forms part of the results obtained in the economy. 5. decision - making process in view of the growing complexity of functional relationships between the various economic and financial variables, a detailed and careful analysis has to be made of the underlying economic conditions. a large number of economic indicators are therefore monitored by the bank to arrive at its monetary policy stance, such as developments in price indices, the level of interest rates, the shape of the yield curve, changes in nominal salaries and wages, nominal unit labour costs, the gap between potential and actual domestic output, money market conditions, the overall balance of payments position, the net open position in foreign exchange and the public sector borrowing requirement. to evaluate the results of such an analysis of the economy a monetary policy committee was created in the reserve bank. the monetary policy committee consists of the governor and deputy governors as voting members and senior officials of the bank as non - voting members. the first meeting of the monetary policy committee was already held in october 1999. at the meetings of this committee an evaluation is made over a two - day period of international and domestic economic conditions, the expected behaviour of the inflation rate and the current stance of monetary policy. although the governors of the bank are the only members with voting rights on the committee, consensus decisions are normally made. the final decision - making power on monetary policy matters nevertheless is still vested in the governor ’ s committee, i. e. a subcommittee of the board comprising the governor and three deputy governors. after the completion of every meeting of the monetary policy committee a statement is issued to the public. this statement summarises the more important aspects that were discussed at the meeting and the conclusions that were made. in this statement the monetary policy stance of the reserve bank is also formulated. for example, in the last monetary policy statement of 2 march 2000 it was concluded that after taking cognisance of the current economic circumstances and consistent with the inflation target set by the authorities, the monetary policy committee is of the opinion that the current level of the repo rate is appropriate. in accordance with the decision taken at the previous meeting, the reserve bank will therefore continue to manage the banks ’ daily liquidity requirement in a way that will result in a repo rate at or around 11. 75 % ”. 6. conclusion as