It could possibly be claimed that the stricter budgetary discipline  BIS Review 18/2002  1  is a rather last-minute conversion, as countries with large deficits are often forced to borrow on the international markets and there submit to the requirements made, in only to keep down the loan costs. Large, growing budget deficits also reduce the possibilities for parties other than the central government to assess the future and increase their costs. Borrowers are forced to pay high and varying risk premiums to borrow on the bond markets, as financial investors want to be paid for the uncertainty regarding the inflation rate or exchange rate. In addition, there is always a risk that if the debt becomes too large the central government will be forced to implement large savings that will in themselves lead to increased unemployment and poor profitability for domestically oriented companies. Large international efforts have been made and are being made to create new regulations and standards that will reduce the risk of financial instability in a deregulated environment. The Basel Committee's new capital adequacy rules are an example of this. Financial supervisory authorities in most countries have been strengthened considerably, although the complexity of the markets always threatens to increase more rapidly than the competence to supervise them. Quantitative deregulation of the financial markets is largely complete and the adaptations have been made. Increased experience of acting in a deregulated environment should in itself have reduced the risk of financial crises.
In this time perspective, it is structural factors, such as demographics and long-term growth rates, that affect developments. One striking feature over recent decades is the downward trend in real interest rates around the world. Various explanations have been put forward for this, including demographic trends. 3 One theory that has attracted major attention is that the decline is a sign of secular stagnation, where different factors have driven up saving but dampened the propensity to invest. This has led to a chronic A more detailed description of the decline in global real interest rates and feasible explanations can be found in my speech at the Swedish Economics Association in 2017. 3  4 [13]  condition of “excessively low” demand in the economy, which has contributed to a lasting decline in real interest rates. Others think that it is not necessarily a question of secular stagnation, but that the situation can, for example, be better described as a deep recession following excessively high debt accumulation in many countries. An environment with a lower average repo rate The major question is what we can expect going forward. For a small, open economy like Sweden's, the interest rate on a global level is important as it affects domestic rates. With free movement of capital, it is difficult to have real interest rates that deviate a great deal from the global level in the long run, even if differences in demographic trends or long-term productivity growth can naturally play a part.