As an example, each percentage point in higher capital is calculated to lead to 15 basis points in higher interest cost. 4  BIS central bankers’ speeches  Proposals of time-varying regulation, such as time-varying capital requirements, are particularly interesting. Their more apparent connection with risk build-up may make them less costly than the alternative of introducing a constant higher minimum requirement. Timevarying regulations might also be structured in a way to be more pointed than monetary policy, which also varies with time. For instance, reducing the LTV threshold ratio for maximum lending against real estate can be more effective in mitigating a housing bubble than general interest rate increases. Along the same line of thought, another possibility is to introduce differentiated regulation. After all, the credit market is not entirely homogenous and it is, for example, possible to make a distinction between a household market and a corporate market. Making some regulation sector specific is also a viable way of reducing the regulatory costs. There is also a debate regarding the role that central banks should play in matters of supervision and the application of rules. Various institutional arrangements can be imagined. One possibility would be for the central bank to determine the policy rate and for the supervisory authority to determine regulations. Time-varying regulations also raise the issue of what would be an appropriate form of institutional organisation.
Stefan Ingves: The Riksbank and the Swedish economy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, to the Swedish Association of Local Authorities and Regions, Tylösand, 28 May 2007. *  *  *  Introduction Firstly, thank you for the invitation to come and speak to this assembly. Today I will talk about my views on the role of the Riksbank and about the current monetary policy situation, roughly as expressed in the discussion at the May monetary policy meeting. International economic activity remains good Sweden is a very open economy and large parts of the business sector are dependent on being able to sell their products to customers abroad. If the economies in countries around us are doing well, then the Swedish economy also does well. In recent years global growth has been extremely high. We believe that the growth rate will slow down slightly in 2007 and 2008, but will nevertheless remain high. After many years of high growth the US economy has now entered a slowdown phase. Economic activity has been dampened above all in the housing sector, but also in the manufacturing industry. Productivity growth is lower. The earlier upturn in house prices has slowed down and residential construction has declined. The problems have been aggravated by the fact that it has been easy for people with low incomes to obtain large loans for housing. As yet the problems in the housing market do not appear to have spread to the rest of the economy.