The times when I have seen risks of this happening and therefore advocated a policy of “leaning against the wind” it was for monetary policy reasons. But it is not necessarily the interest rate lever that needs to be used to prevent this type of credit-driven bubble. The regulation lever is probably at least as effective in most cases. But what is worth noting in particular is that in this case one would use the regulation lever, not to maintain financial stability but for monetary policy reasons. This is a further example of the  12  See, for instance, Mishkin, F. S., “Monetary Policy Strategy: Lessons from the Crisis”, paper presented at the ECB Central Banking Conference, “Monetary Policy Revisited: Lessons from the Crisis”, Frankfurt, 18–19 November, 2010. 6  BIS Review 164/2010  close links between the two policy areas and their tools, and also of how regulation can actively support monetary policy. Greater focus on systemic risks... Another lesson from the crisis is that as we now try to improve the regulatory framework and supervision, we should focus much more than before on the risks at the systemic level, for the financial system as a whole. The type of measure that is discussed in this context is often referred to as macroprudential policy. The actual toolbox for macroprudential policy is gradually being developed.
Confidence in the Swedish financial system could have been seriously damaged if a failure like the one at Lehman Brothers had been allowed to occur. The Riksbank’s assessment was that the two banks were experiencing temporary liquidity problems, but that their solvency was not threatened. Finansinspektionen later revoked Carnegie’s licence to conduct banking activities owing to serious deficiencies in the company’s risk management and violation of the law concerning asset management. The decision to revoke the licence thus had nothing to do with Carnegie’s liquidity problems or with the Riksbank’s loan. Carnegie is now owned by the Swedish National Debt Office and the Riksbank’s liquidity assistance has been repaid. The Riksdag (the Swedish parliament) has also introduced a new act concerning support to credit institutions, which will give the government the opportunity to take the necessary measures to strengthen stability in the financial system. For instance, a government guarantee programme has been presented to support the banks’ and mortgage institutions’ medium-term funding, and a stability fund has been established to manage potential future solvency problems in Swedish institutions. The current situation Despite the crisis in the global financial markets and the increasingly gloomy economic prospects, the assessment is that the Swedish banks still have good resilience to facing the situation that has arisen and future developments. 1 The losses arising from the international crisis have so far been limited, not least in an international perspective, and the Swedish banks have good financial strength.