It is difficult to estimate how the impact of a change in interest rate on growth and inflation will differ at different points in time and in different countries, but the attempts to do so indicate major differences. Given the fact that the composition of households' financial portfolios, their method of financing their accommodation, the significance of bank lending for corporate investments and the formulation of regulations and taxes differ substantially between different periods in time and different countries, this is hardly surprising. As I pointed out earlier, inflation expectations probably also play an important role in price setting. It therefore seems reasonable to assume that the exchange between interest rates and inflation is less in countries where monetary policy has been aimed at stabilising inflation expectations than in countries, and points in time, with large fluctuations in the inflation rate. There is also a monetary policy interest in being familiar with the banks' methods for credit assessment, to aid forward-looking assessments of growth under the assumption of unchanged monetary policy. When the Riksbank makes decisions on the formulation of monetary policy, these are based on, for instance, assessments of how households and companies will react to rising prices on shares and property. One important condition for enabling optimism regarding future growth and increase in wealth to be converted into consumption and investment is that this can be financed. This is where the banks' assessment of credit risks comes in.
After an assessment has been thoroughly debated in the Committee, the final assessment becomes public.7 The assessments, and the publication of the results, have proved to be a powerful tool. To date, more than 200 adjustments have been made by member jurisdictions in response to findings raised by the assessment teams. In addition, the process has also generated a positive feedback loop, meaning that the lessons learnt from assessments are used to improve and clarify the standards. So far, the assessments have concentrated on the capital framework, but from 2015 onwards the scope of this work will widen further to include the implementation of the liquidity coverage ratio and the SIB-requirements. However, for the new, stricter requirements to bring the benefits we are aiming for, it is important that they be properly reflected, not only in national legislation, but also at the level of individual banks. To use an analogy of car safety, if we are now providing banks with air bags, in the form of higher capital requirements, it is important that those air bags are actually activated in case of an accident. For this to happen, the sensors need to be functioning and well-calibrated. For banks, this means that risk weights need to signal appropriately the risks that individual banks actually face. This aspect is captured in the Committee’s thematic assessments. To put it simply, in these assessments we examined whether the banks’ risk-weighted assets could be trusted.