The fall in risk premiums meant that the effect on asset prices were more important than what the changes in the risk free rate alone would suggest. While low risk premiums, taken at face value, signal a healthy economy, many supervisors and central banks were concerned that risk premiums had fallen too far. As we all know, risk premiums in credit market rose dramatically this summer. Uncertainty over the value of US subprime mortgage backed securities then ignited a furious “flight-to-quality”, which actually seized up important segments of the money market. It is too early to tell what the permanent outcome of these events will be. However, it is clear that if they signal a return to higher risk premiums and tighter credit conditions, asset price inflation is likely to slow down. The area where the current regime of low interest rates and small risk premiums has had its most marked impact is probably that of residential property and household debt. The rise in house prices the last ten years have indeed been unprecedented in duration, magnitude and synchronisation across countries. In Sweden, this has caused a substantial amount of public concern, and an often asked question is if there is a significant overvaluation in the housing market and if the households are overly indebted. Answering these questions is a daunting task, and requires an educated opinion on the equilibrium price of residential property and on the optimal level of household indebtedness.
6  Other societies espouse comparable principles, “It cannot be acceptable in a democratic society that a group of unelected individuals are vested with important responsibilities without being open to full scrutiny and accountability.” Cf. speech given by Alan Greenspan on 5 December 1996 on “'The Challenge of Central Banking in a Democratic Society,” Washington D.C. Also, “Democratic principles demand that, as an agent of the government, a central bank must be accountable in the pursuit of its mandated goals, responsive to the public and its elected representatives and transparent in its policies.” Cf. speech given by Ben Bernanke on 26 May 2010, on “Central Bank Independence, Transparency and Accountability,” Tokyo. BIS central bankers’ speeches  3  responsibility for its own area.7 Each year we submit an Accountability Report to the Federal Assembly, in which we outline how we have fulfilled our mandate. Also, on frequent occasions we are called upon to provide a full account of our actions to the relevant parliamentary commissions. In addition, we provide the general public with regular information about our assessment of the economic situation and monetary policy – in press releases or half-yearly media conferences immediately after our quarterly monetary policy assessments, in speeches and in interviews. In this way we ensure transparency. Through our legal status as a joint-stock company, we also have duties towards our shareholders which we fulfil each year, at the General Meeting, within the framework set out by the National Bank Act.