Henry Ohlsson: Decision today, consequences far into the future Speech by Mr Henry Ohlsson, Deputy Governor of the Sveriges Riksbank, at a breakfast event, organised by Swedbank, Stockholm, 18 March 2016. *  *  *  I would like to thank Bo Enegren, Hanna Köhler, Gustaf Norrefeldt, Cecilia Roos-Isaksson, Marianne Sterner and Ulf Söderström for their help with this speech. Accompanying figures and the table can be found at the end of the speech. Some of the decisions we make only have significance for the here and now. Others may have consequences for many decades to come, in some cases for the rest of our lives. Our choice of education and purchase of a home are examples of decisions that have considerable significance over a long period of time. For a person who puts themselves in debt through decisions with long-term consequences, it is of course important how high the interest rates on the debt are. And this does not concern the interest rates paid now or in the medium term, but also interest rates several decades ahead. In recent years, interest rates have been at their lowest level in modern times. Several other central banks have done as the Riksbank and cut their policy rates below zero, and government bond yields at longer maturities are now at historically low levels. This is partly due to the prolonged recession following the financial crisis.
•  Several Asian regulators, such as China, India, Philippines and Singapore, have set capital requirements that exceed the Basel III standards. •  And banks in China, India, Thailand, Hong Kong and Singapore were already subject to liquidity requirements prior to Basel III. Second, Asia’s financial systems emerged from the last crisis less affected than their global peers, with much of their financial resources and businesses intact. BIS central bankers’ speeches  3  •  A focus on traditional banking helped Asian banks avoid the fall-outs from the collapse of complex, structured products and risks from outsized trading desks. •  This, together with their strong deposit funding, means that Asian banks do not need to deleverage or withdraw from markets in order to meet the more stringent capital ratios or new liquidity requirements. Asian banks have been able to fill the financing gaps that opened up as global banks concentrated on repairing their balance sheets back home. •  According to BIS data, between 2008 and 2014, the share of Eurozone banks in international claims on Emerging Asia more than halved to just 15% whereas the share of Asian banks almost doubled to 60%. If Asian banks continue to maintain strong buffers and manage their risks well, they are wellplaced to thrive and grow in the new regulatory environment. Technological innovation A third major force shaping Asia’s banking landscape is technology, specifically digital technology. This could prove both transformative and disruptive in a region where banking penetration remains low.