What is needed here is a system where macroprudential policy fulfils an important role and can, in an interplay with fiscal and monetary policy, counteract the emergence of financial imbalances. The Riksbank’s assessment is that an amortisation requirement corresponding to at least Finansinspektionen’s proposal needs to be introduced as soon as possible. However, further measures in addition to this are needed to reduce households’ willingness to take on debt. Feasible measures include a reduction in the tax deduction allowed on interest payments, the introduction of a debt-to-value limit and stricter requirements for the banks’ credit assessments of individual households. More structural measures are also needed to increase the supply of housing and lead to a more efficiently-functioning housing market as I have already mentioned. But such reforms can only be introduced gradually and it will therefore take time before they can have any significant effect on household indebtedness. Next monetary policy decision presented on 3 September To summarise, I consider it is of the utmost importance that the mandate for macroprudential policy is clarified and that the application of the different tools does not come to a standstill. There is currently widespread awareness that a long-term sustainable solution requires a holistic approach that involves several policy areas. Nevertheless, there is a risk that more comprehensive measures and reforms are perceived as so unwieldy and difficult to manage that politicians would rather wait and hope for the best.
Figure 15 shows that the population has increased much more than the number of completed homes over the past ten years, which is an indication that housing construction has been too low. Despite housing investment now increasing, it is important that structural problems on the housing market are discussed so that we can obtain greater efficiency on this market in the longer run. Several inquiries have put forward proposals regarding what needs to be done, most recently this was done in an annex to the Long Term Survey of the Swedish Economy. Not having an efficient housing market is not merely a problem for indebtedness, it can also comprise a threat to a healthy development of society and it can create conflicts between the generations. The Riksbank has long pointed out the risks linked to the high level of household indebtedness and has previously also weighed in them in the repo-rate decisions to some extent, by setting the rate somewhat higher than would otherwise have been the case. However, the effect these considerations have actually had on monetary policy – the amount by which the repo rate has actually been set higher – has been exaggerated substantially. There are quite simply limits as to how far the policy rate can be used for this purpose. And 6  BIS central bankers’ speeches  let me emphasise that the main focus for monetary policy has always been to bring inflation back on target and to attain a good development in the real economy.