The efforts made to strengthen preparedness have probably contributed to the fact that the Swedish authorities were better equipped to deal with a crisis in the financial system this time than they were in the early 1990s. It is also probable that the lessons learned during the crisis of the 1990s have provided a number of insights and greater risk awareness on the part of many of the players in the financial sector; even though we can assume that some of these lessons have been forgotten. This should in turn mean that the Swedish banks were in a somewhat more favourable position at the outbreak of the current crisis than many banks in other parts of the world. The current crisis has revealed new weaknesses Despite the measures taken by the Riksbank and other central banks to promote stability, it is clear that hardly any of the authorities around the world predicted the global extent and complexity of the current financial crisis. The indications that could be discerned here and there that risks and bubbles were developing were not strong enough to convince enough people of the need for countermeasures. Above all, it seems that there was no clear overall picture of the possible global consequences if any of these bubbles burst. Previous financial crises have, after all, mainly been generated domestically and have thus been a primarily national concern.
Here we can discern the two core tasks that the Riksbank still has: to maintain price stability and to promote a safe and efficient payment system. Banks are of central importance Nowadays, a very large part of what we normally refer to as money consists of funds in accounts at the banks, and a very large proportion of the payments made take the form of transfers between the accounts provided by the banks. The banks therefore play a central role in the financial system. Although banks in various forms have existed for many centuries, it was not until the 19th century that the financial sector began to develop on a large scale. The emerging industries needed funding. There was also a need for major infrastructure investments, for example in the railways. The banks acted as credit intermediaries, thus enabling the investments to be made. They gathered together our savings surplus and converted it into loans. Even though the financial markets are much more sophisticated today than they were in the 1800s, the basic role is the same, that is to mediate credit and provide payment services. These functions are indispensable to a modern society. If they were to fail, the entire economy would suffer extensive and indiscriminate damage. This is what gives the financial sector its unique position. Banks entail bank crises The expansion of the banks also led to bank crises. In Sweden, for example, the expansion of the 1870s ended in the severe crisis of 1878-1879.