The fact that the increased lending results in an equal increase in deposits is due to all transactions in Swedish kronor being made through the banks’ accounts in the RIX payment system, which the Riksbank administers. The loans are distributed in the Riksbank’s auctions by means of the banks presenting bids for how much money and at what interest rate they want to borrow at each separate auction. Immediately after the auctions are over the money is distributed between the banks according to the bids that have come in. The Riksbank credits an amount corresponding to the allocation in the respective bank’s account in the RIX system. Then when the banks' transactions and payments are made during the day, the allocation of money between the banks changes, but the money never leaves the system. As we have already noted, the Riksbank has lent money to the banks on a wide scale since last autumn as a result of the financial crisis. However, monetary policy motives have gradually also gained significance in the lending. As the repo rate is close to zero and can in practice hardly be cut further, a need has arisen to supplement monetary policy with loans at longer maturities and at a fixed interest rate to also bring down slightly longer rates.
Consumption is projected to rise by about 5 per cent in 2004, then slow through the projection period as a result of lower growth in real disposable income. Looking ahead, an increase in employment and a tighter labour market are expected to result in somewhat higher wage growth. For 2005, the Government has proposed income tax reductions for households, but the effect on real disposable income will be partly offset by a higher rise in prices as a result of the increase in VAT. Debt accumulation in the household sector has been approximately 11 per cent in the last year. Debt has risen at a markedly faster pace than income. Our projections are based on a gradual increase in the interest rate in line with forward interest rates. Rising debt and higher interest rates will contribute over time to lower growth in household disposable income. In the first three quarters of 2004, imports increased markedly compared with the same period last year. This may indicate that some of the growth in demand has resulted in an increase in imports instead of higher domestic output. Imports as a share of mainland GDP are rising. This is a result of an increase in the international division of labour, due in part to the removal of trade barriers. The rise in the share of imports must also be seen in relation to low prices for imports from many low-cost countries and the weak competitiveness of domestically-oriented industries.