In Sweden, these assets have increased from around SEK 6,000 billion to around SEK 14,000 billion over the past ten years, see Figure 5. Moreover, household saving in funds and pension companies, as a complement to ordinary bank savings, has increased. This development has meant that households have also become more sensitive to various shocks on the financial markets. Banks also rely to a large degree on market financing, see Figure 6 and it is not risk-free for them either. A large part of the short-term borrowing is moreover in foreign currency, particularly in US dollars. The fact that market financing is so large may be partly due to the Swedish pension system. If the collective pension savings contribute to household savings declining, it will reduce the banks’ opportunities to obtain financing in this way. They will then be forced to instead issue their own bonds on the market and that they also borrow abroad could depend on pension savings to some extent taking place in assets in foreign currency. 32 The development towards an increasingly sophisticated financial system, with more market financing, is essentially positive and actually reflects that “everyone has become richer”. When total global wealth increases, we need a larger and more developed financial system to administer it. The Swedish banking system only consists of a few actors who are closely interconnected with one another. This entails larger risks. If problems arise in one bank, they will easily spread to others.
But this technology means at the same time that bitcoin is very ineffective to use, as each payment requires large amounts of time and energy. Nor is there anything to limit the supply of copies of bitcoins in the form of other cryptocurrencies. So-called stablecoins are instead based on borrowing credibility from state money by promising full back-up in a state currency. 11 However, it is very difficult for a totally private currency to gain the same credibility as state money enjoys. What do all of these challenges and changes mean for us central banks? Well, we must also adapt our activities to the new environment. This is nothing new for an 9 This has also been done at EU level, for instance through the PSD2 legislation, which enables payment service  providers, which do not have their own deposit accounts, to offer payment solutions initiated from bank accounts. This increases the circle of companies that can offer payment products. 10 For further information on this, see the CPMI report “Non-banks in retail payments” (2014). 11 For more information on stablecoins, see Arner et al. (2020). 6 [35]  institution like the Riksbank, which has existed for more than 350 years. It is difficult to survive for so long without being able to adapt. But what is new this time is how quickly we may need to adapt.