Per Jansson: How do we stop the trend in household debt? Work on several fronts Speech by Mr Per Jansson, Deputy Governor of the Sveriges Riksbank, at the SvD Bank Summit, Stockholm, 3 December 2013. *  *  *  Accompanying figures can be found at the end of the speech. The original idea of the organisers was that I would talk about the current situation from a monetary policy perspective. However, wanting to focus instead on questions of principle, I was able to persuade them to let me do so. Now, it may not make much difference in practice, as the current monetary policy debate in Sweden so largely concerns questions of principle. I intend to start by looking back at how the Swedish economy has developed since the financial crisis broke out around five years ago, as well as at the debate about monetary policy during this period. I will then look ahead and give my views on the new policy area, macroprudential policy, and what I believe we need to do to escape the situation that has arisen with a high and increasing level of debt in the household sector and a persistent upward trend in housing prices. The conclusions we draw from looking back are important, as they may affect our view of what is the appropriate future course of action.
Policy clearly within our mandate Another argument that I think is fairly difficult to understand is that the Riksbank, because of the policy we have conducted, should have acted beyond our mandate and done something we should not have done. Sometimes it has been claimed that we have introduced a new target for monetary policy or that we have begun to conduct housing policy. Had we only kept to our task, monetary policy would have been more expansionary, we would have come  2  See Svensson (2013). 3  I discuss this question in greater detail in Jansson (2013). BIS central bankers’ speeches  3  closer to attaining the inflation target and everything would have been much better, the story goes. But as I have already said, the purpose of the policy conducted in recent years has been to create the conditions for a sustainable development in the Swedish economy by reducing the risk of excessive debt and inflated housing prices. After a number of years of rapidly-rising house prices and a build-up of debt among households, it became clear in many countries that developments were based on overly optimistic calculations. When housing prices fell, household assets declined in value rapidly, but the size of the loans remained the same. Households in this situation have reduced their consumption and begun to save to achieve a better balance between assets and debts.