It is a question of dampening these debt and price increases using macroprudential or fiscal policy measures, but also fundamental reforms on the housing market to generate a sustainable and improved balance between supply and demand. But if the Riksbank is so concerned, shouldn’t it then reconsider its policy and raise the interest rate? I hope that it has become clear during my discussion here that I think there are solid and convincing reasons to pursue the policy the Riksbank is currently pursuing, but I would like to repeat them briefly in any case. The inflation target has been a nominal anchor in the Swedish economy and a major reason behind the favourable economic development over the past two decades. For some time now, following the long period of inflation falling below the target, there have been signs that confidence in the inflation target has begun to falter. The Riksbank’s main task is to maintain confidence in the target – a task it does not share with any other authority. The repo rate is a blunt tool when trying to curb increases in household debt and housing prices as it influences so much else in the economy. A considerably higher rate would likely be needed in order to have a substantial effect, but then inflation and growth would be dampened, quite extensively in the worst case scenario. Neither low inflation nor weaker growth would contribute to a sustainable rise in the interest rate level.
Conclusion I think it is quite clear that the banking industry can no longer afford to continue conducting business as usual and ignore the issues that I have highlighted. The banking industry must take stock of the external challenges it faces today, including a very difficult economic environment, the impact of evolving technologies and the shift in customer expectations. It must focus on winning customer loyalty, providing value, operating efficiently and resiliently, and attracting the right talent. In addition, the enabling institutions such as educators and regulators need to provide the necessary support if the industry is to succeed in this transformative journey. The industry is clearly at a crossroads and needs to make proactive decisions now to remain relevant in the future. There are two paths that the industry can take. If the banking industry continues to operate the way it has in the past, ignoring the many challenges that it faces today, it would lose its dominant position. Competition Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  - 19 -  will increase from different institutions such as telecom operators, technology companies and FinTech firms, and customers will flock to these solutions, as we have already seen in some markets. Banks, as a result, will be pushed to the fringes of the industry, if not removed altogether. But if the industry manages to evolve, then the picture could be different.