Another important question is whether the Riksbank should issue e-krona directly to the general public or go via the banks, as we do now with banknotes and coins. If we were to use the tried and tested model, the banks would buy e-krona from the Riksbank and then give their customers access to them. If we were instead to turn directly to the general public, it would mean in practice that households and companies could open accounts, or something similar to accounts, in the Riksbank. It would in this case be something entirely new for the Riksbank, which would need to take a stance on how this could affect the banks’ operations and how the Riksbank could best manage all of the new customer relations that arise. Should e-krona generate interest? Other examples of strategic questions are whether the Riksbank should issue unlimited amounts of e-krona if there was a high demand on the market, and whether ekrona should generate interest. These two questions concern both monetary policy and the financial stability of the banking sector. From a monetary policy perspective, an unlimited issue could be expected to increase the Riksbank's possibilities to steer the money supply, that is, issuing could in some situation function as a monetary policy tool. Some economists advocate that the central bank should replace cash with a digital currency that can be given a negative interest rate, for instance by reducing the balances on e-krona accounts or not redeeming e-krona at their full value.
The Governors and Heads of Supervision were very clear at the beginning of this year that their focus was on reducing unwarranted variability in risk weights, but there should not be a significant increase in global capital requirements. I am optimistic that these variability problems in risk weights can be mitigated without any such thing as a Basel IV. This discussion in Basel has been and remains controversial, not least because, by definition, the BCBS cannot level the playing field without changing capital requirements for some firms – and for firms that are outliers, these increases could be significant. But one very important part of the package has attracted less attention. I have long been troubled, as I know have members of the Treasury Committee, by the gap in risk-weights for low-LTV mortgages between firms who use models to calculate them and (typically smaller) firms who use a standardised, and therefore relatively crude, weighting provided by regulators. Now of course the leverage ratio is an essential complement to the risk-weighted framework which mitigates the effect of such disparities. Nevertheless they still bother me both in light of our secondary competition objective, given the risk of an un-level playing field, but importantly also in light of our safety and soundness objective because of the economic incentive it provides for standardised firms to concentrate on higher-LTV lending. We have therefore argued in Basel for a significant lowering of the standardised risk-weight for low-LTV mortgages which I hope we will be able to secure.