relatively little affected by the current lower level of economic activity. property companies ’ earning capacity should thus be relatively stable, which is positive from the point of view of both the company owners and creditors. however, the weak level of residential construction has led to sluggishness in the housing market. the fact that it is possible to move between residential areas and between regions stimulates mobility among the labour force and flexibility in the functioning of the labour market, which affects economic developments. a clear example of this is the stockholm region, which has a housing shortage. this has probably led to a lower growth for the stockholm region than would have otherwise been the case. as 25 per cent of sweden ’ s economy lies in stockholm, this affects the entire country ’ s growth potential. a housing sector that does not function properly will thus affect the country ’ s potential growth, as it will become more difficult for labour to move to where the jobs are. for this reason, it is in my opinion important that a review is made of the total complex of regulations governing the functioning of the housing market, in order to allow it to function better. from the riksbank ’ s point of view, a higher potential growth means that demand in sweden can be higher at the same time as price stability can be maintained. the credit granting process if the housing market can become more flexible, it will enable new construction where housing is most needed. these new investments will need to be financed. it is therefore important to be aware of the professionalisation of the credit granting process that has occurred within the financial institutions following the bank crisis. this is reinforced by the new capital adequacy rules that are being worked out. the modern credit granting process focuses more on the individual borrower ’ s cash flows. this individualisation means that the interest paid will to a greater extent reflect the market ’ s valuation of the profitability of the individual object, e. g. a particular property. does the banks ’ setting of interest rates vary between different borrowers and credit objects? how is credit granted today? how do the banks assess a loan application? i shall not explain these processes in detail, but outline the most important elements. credit granting is part of the banks ’ core business. it involves mediating savings to borrowers. as managers of our savings, the banks have always needed to be able to assess, measure and manage the risks inherent in these operations. the four major banks regularly monitored by the riksbank have similar

that the necessary means are available and can be applied. the advantages of delegating monetary policy to an independent central bank have been analysed fairly extensively in academic research. the main argument for delegation is that politicians can avoid the temptation to use monetary policy for short - term stimulation of output and employment. the collective experience of previous years - and from academic research - is that such stimulation often runs the risk of leading to wage - price spirals, which in the end can have severe implications for welfare in society. a parallel argument can be made concerning policy for financial stability, although it is still a rather unexplored topic in economic literature. by delegating the lender of last resort function to the central bank, and making it clear that the central bank will not support insolvent banks, the politicians can avoid the temptation to use central bank funds to bail out banks in financial difficulty. another reason for giving the central bank formal operational independence is that only then can the executive board of the central bank be made fully accountable for the bank's operations, and as i have said already, accountability is a crucial means of attaining efficiency. transparency accountability is intertwined with the issue of transparency, not only through clearly defined objectives, but also through actions. a central bank should be clear about which actions are being taken and for what reasons. most people agree that central banks should do their best to minimise uncertainty over policy actions, as this will make policy more efficient. as my colleague mervyn king said, if monetary policy becomes so undramatic and predictable that it is boring, then we will really have achieved a low level of policy uncertainty! the issue that remains open to debate is which information should be published and when. at the riksbank, we have chosen to publish our inflation forecasts four times per year and to publish edited minutes of the executive board meetings, where interest rate decisions are taken with a lag of about two weeks. while we strive to be as open as possible, there are of course limits. one of the most important is determined by what we know about the functioning of the economy and the effects of monetary policy. not everyone agrees, however, that transparency is a good thing for attaining financial stability. many people argue that so - called constructive ambiguity is the best way to avoid problems of moral hazard in the banking industry. i believe, however, that transparency is important in this area as well. banks that are " too big to fail " from a