The crisis was triggered in the United States on the market for mortgages to households with a poor ability to pay, what are known as subprime loans. Hedge funds have played a limited role in the development of the crisis. Instead it is highly leveraged institutions that have been central to the sequence of events, where some of the lending has been outside of the banks’ balance sheets. My main messages today are that so far Sweden has been able to handle the problems that the global financial crisis has caused for the financial system, although the negative consequences for the Swedish economy will be considerable over the next two years. And that there is a need to reform the global financial system in order to reduce the likelihood of new financial crises. I have divided my speech into three sections. I shall begin with the financial crisis in an international perspective: the course of events, the causes of the crisis and the handling of the crisis. Then I shall discuss how Sweden has been affected by the crisis: Sweden's dependence on the outside world, measures to counter the crisis and our experience of previous financial crises. I shall conclude with a section on the current economic situation and monetary policy, where I shall comment on new statistics without making any new assessment of monetary policy.
The most recent study also includes financial crises in emerging economies.5 Here they point to three common features. Firstly, house and share prices fall substantially and over a long period of time. For house prices the average fall in real terms is 35 per cent extended over six years and for shares it is 55 per cent over three and a half years. Secondly, production and employment fall. On average, GDP per capita falls by 9 per cent over two years and unemployment rises by an average of 7 percentage points over four years. Thirdly, central government debt almost doubles, not as a result of the costs of recapitalising the financial system, but due to falling tax revenues and fiscal policy stimulation measures. How relevant are these comparisons in analysing the current crisis? Reinhart and Rogoff themselves point out on the one hand that the monetary policy frameworks are now more flexible and that the central banks have acted more aggressively than before. On the other hand, the crisis in question is a global financial crisis, which makes it more difficult to grow  3  The countries that have suffered these crises are Finland, Japan, Norway, Spain and Sweden. 4  Carmen M. Reinhart, and Kenneth S. Rogoff. “Is the 2007 U.S. Subprime Crisis So Different? An International Historical Comparison.” American Economic Review Vol. 98 No. 2: 339-344. (2008). 5  Carmen M. Reinhart, and Kenneth S. Rogoff.