i against using the repo rate to influence housing prices and household indebtedness? the main reason is that the costs – in the form of inflation below the target for example, borio and drehmann ( 2009 ) present an indicator of financial crisis based on trend deviations for private loans as a percentage of gdp and property prices in the paper “ assessing the risk of banking crises – revisited ”. the latter components are intended to capture the likelihood and magnitude of a fall in property prices. finansinspektionen has recently proposed a floor of 15 per cent for risk weights for mortgages. this floor could be raised if there seems to be a need to dampen the banks ’ lending for housing purposes. bis central bankers ’ speeches and unemployment – appear to be high in relation to rather uncertain gains. most analyses indicate that the policy rate has very little impact on housing prices and thus also on household indebtedness. 17 using the repo rate would be justified if what we were seeing was a credit boom throughout the swedish economy. but this is not what we are seeing. household indebtedness is increasing at approximately the same rate as disposable incomes. the rate of growth in bank lending to companies typically varies with the business cycle, and at present this rate is low ( see figure 11 ). all in all, credit growth is relatively low in the swedish economy. figure 11. lending to households and companies from monetary financial institutions annual percentage change - 5 - 5 total lending from monetary financial institutions companies households - 10 - 10 source : the riksbank. another problem with using monetary policy to influence household indebtedness is that this also has an impact on the exchange rate. all else being equal, higher interest rates lead to a stronger currency and, again all else being equal, a stronger currency leads to lower inflation and lower resource utilisation. there are thus clear costs associated with using monetary policy in this way. the alternative – and a better one – is to separate monetary policy from the policy that aims to promote financial stability. this could be done by establishing an effective framework for macroprudential policy that is a policy that aims to counteract risks in the financial system as a whole. see for example kuttner, kenneth ( 2012 ), “ low interest rates and housing bubbles : still no smoking gun ”, under publication in the role of central banks in financial stability : how has it changed?, and claussen, carl

eva srejber : future scenarios for housing finance speech by ms eva srejber, first deputy governor of the sveriges riksbank, at the institute for housing and urban research, ga¤vle, 19 march 2003. * * * introduction housing finance in sweden constitutes a significant part of the swedish financial system. at the beginning of this year, total lending from banks and mortgage institutions amounted to approximately sek 2200 billion, which was fractionally higher than sweden's gdp. mortgage institutions account for just over 50 per cent of this lending, which is why it is vital that financial market players understand the housing finance market, its participants and how it affects and is affected by the swedish economy. for this reason the seminar today can play an important role in advancing knowledge within the field. there are several factors that affect housing finance. these include demand factors, supply factors and structural factors. i will not be mentioning all of these but will instead be focusing on three important factors, namely internationalisation, changed regulations and adjustments of household and corporate balance sheets. i will also be attempting to make a connection to how changes in these three broad areas influence the financing of housing. allow me to begin by outlining the developments of recent years as a point of departure for future prospects. a process of internationalisation has been ongoing for many years now and is driven by several factors. the process is particularly evident in the capital and financial markets. it is usually said that when global production increases by 1 unit, international trade increases by two units and capital movements by four. the increased commercial possibilities that arise as countries become more economically integrated are perhaps the greatest driving force. another force that is driving the internationalisation process is it. in spite of the it crash, there is still considerable potential afforded by information technology. while it companies have suffered badly on the stock market, the use of the technology itself does not represent a " bubble ". it has resulted in better accessibility to both customers and markets as well as to information. for example, it enables mortgage institutions to find buyers of their services in several locations without having a physical presence there. moreover, it reduces costs for administration, given the initial costs, and this ought to lead to better conditions for consumers. yet another driving force is the growth of international organisations such as the eu. with 13 accession countries, the eu could soon be enlarged to include 10 new members, and this is leading toward the creation of a very large and important common capital market.