The banks, on the other hand, were funded by deposits and short-term bonds, but were not allowed to issue long-term 2  BIS central bankers’ speeches  mortgages. However, the mortgages were indirectly funded by the general public’s savings in that the banks were forced to invest in housing bonds. In the 1960s, the general pension fund (AP fund) was established, which meant that the state gained further control over savings in the economy and over the conditions for the banks’ funding. When pension allocations began to be deposited with the AP fund, it quickly grew to become the largest investor in mortgage bonds, among others. Developments accelerated when the credit and currency markets were deregulated in the mid-1980s at the same time as technological developments were beginning in the financial markets. New participants entered the markets and began to offer new financial products, such as saving in unit trusts. The Swedish banks were not slow in following the trend and began to offer their customers their own unit trusts. Saving in unit trusts involved gains for both the banks and households. The banks gained a new source of income and households were given the opportunity to actively invest their savings and spread risk. State initiatives have since continued to push household saving towards the securities market. “Allemansfonder” (national public saving funds), investment savings accounts, unitlinked insurances and individual pension savings are all examples of savings forms that are under certain circumstances taxed at a lower rate than savings in traditional bank accounts.
As I said at the start, developments in the real economy and developments on the financial markets are interlinked and problems with financial stability thus risk having a negative effect on growth in the real economy. Problems on the housing and mortgage markets thus risk intensifying an economic slowdown by means of the financial markets and resulting in rising unemployment. As such a situation would affect demand in the economy, and thereby monetary policy, we cannot close our eyes to the risks linked to high household indebtedness. This is the case even though the Riksbank has limited opportunities to do anything about the underlying factors that are pushing up household debt. Many people believe that macroprudential policy, which is now becoming established in Sweden, will resolve the problems of high household indebtedness all on its own. I do not think it is that simple. I believe that macroprudential policy is at present only able to alleviate the problems by increasing the banks’ resilience to these risks and hopefully also dampening the indebtedness to some extent. What do we need to do to obtain a better balance in the long run and to attain a development that is sustainable in the long run? I believe that we need input from several areas. In recent years, a number of measures have been taken to dampen household indebtedness. For instance, Finansinspektionen (the Swedish Financial Supervisory Authority) has introduced a mortgage ceiling that limits how much a household can borrow in relation to the value of the property.