Our monetary policy strategy is based on using a highly expansionary monetary policy to safeguard confidence in the inflation target, which has provided a nominal anchor for the Swedish economy for over 20 years. However, we are well aware that the low interest rate level increases the risk of problems arising on the housing market later on and that measures need to be taken elsewhere to make our strategy successful in the longer term. Consequently, when we discuss possible measures for the housing market and household indebtedness, this is a matter of risk management: of adopting measures today to prevent the risk of unfavourable events later on. When it comes to the exact design of measures, to some extent it is, therefore, a matter of subjective opinions and not an exact science. The mandate for macroprudential policy in Sweden must be clarified Macroprudential policy is the policy area which has come to dominate the international discussion about reducing risks linked to household indebtedness. 12 Several targeted tools are offered within macroprudential policy which could be used for this purpose. For example, requirements could be placed on banks’ equity by introducing countercyclical capital buffers and risk-weight floors on mortgages, and limits could be placed on how much households can borrow by way of loan-to-value limits and an amortisation requirement. It is therefore obviously very concerning that the previously adopted macroprudential policy framework in Sweden has encountered legal problems.
Stefan Ingves: The housing market and household indebtedness from a central bank perspective Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, at SNS (Centre for Business and Policy Studies), Stockholm, 19 November 2015. *  *  *  Why are the housing market and household indebtedness important to the Riksbank? As you have no doubt noticed, the Swedish housing market and Swedish household indebtedness are being widely discussed. In my speech today, I intend to discuss this matter from a central bank perspective. Why is it so important for us at the Riksbank? In this context, it is important to remind ourselves of our role in the Swedish economy. Under the law, the Riksbank has two main tasks: price stability and financial stability. 1 My opinion is that the housing market and household indebtedness may have great significance for our chances of performing both of these tasks. And consequently, as I see it, it is self-evident that the Riksbank should be interested in these issues. In my speech today, I would particularly like to point out two important conditions for Sweden regarding monetary policy, price stability and financial stability. As regards monetary policy, we need to take account of monetary policy abroad. If monetary policy abroad becomes more expansionary and Swedish monetary policy is passive, the exchange rate will strengthen and inflation in Sweden will fall.