How well designed are the financial regulations that have been imposed after the global financial crisis in 2008–09 and the subsequent euro crisis? Will the new bail-in rules work in a systemic cri ...

Much is right with Swedish macroprudential policy. But regarding risks associated with household debt, the policy does not pass a cost-benefit test. The substantial credit tightening that Finansinspektionen (the FI, the Swedish Financial Supervisory Authority) has achieved â?? through amortization requirements and more indirect ways â?? has no demonstrable benefits but substantial costs. The FI - and the international organizations that have commented on risks associated with Swedish household debt - use a flawed theoretical framework for assessing macroeconomic risks from household debt. The tightening was undertaken for mistaken reasons. Several reforms are required for a better-functioning mortgage market. A reform of the governance of macroprudential policy â?? including a decision-making committee and improved accountability â?? may reduce risks of policy mistakes.

How well designed are the financial regulations that have been imposed after the global financial crisis in 2008–09 and the subsequent euro crisis? Will the new bail-in rules work in a systemic cri ...

Distributional Effects of Deregulating the Stockholm Rental Housing Market : Report to the Swedish Fiscal Policy Council

As an unintended by-product of their housing choice, homeowners are exposed to a considerable risk because of the fluctuation in house prices. Markets in derivatives linked to house price indexes would make it possible for households to insure against price risks. Such markets have started to develop in recent years. This article discusses the economic rationale for such markets and the various practical problems involved in making them more broadly attractive.

Swedish financial markets, in particular the money market, have developed very rapidly during the 1980s. Concurrently, there has been an equally drastic change in the conduct of monetary policy and a shift away from the previous reliance on regulatory policy instruments. This deregulation of markets and policy is the starting point for this dissertation, which discusses various aspects of the behavior of the money market and how interest rates and other financial variables are affected by monetary policy. A major topic in the dissertation is the question of international interest rate dependence, i.e., the extent to which independent control of domestic monetary variables is possible. This problem, which is important both for monetary policy and for the understanding of the money market in general, is analyzed theoretically using models of international asset pricing. The discussion emphasizes the role of the foreign exchange risk premium in the relation between domestic and foreign interest rates. A detailed study is also made of a currency basket system and its implications for the risk premium and the interest rate dependence. Another important topic is the relation between interest rates on assets with different times to maturity, i.e., the term structure of interest rates. The behavior of the term structure in the Swedish money market is studied with special emphasis on the role of interest rate expectations. Among the problems addressed is also the role of discount window policies, i.e., the conditions under which banks are allowed to borrow reserves from the central bank. The analysis focuses on what these rules imply for the behavior of interest rates and the effects of various policy instruments, and on how discount window policies should be designed to improve monetary control.

Finland and Sweden both experienced financial crises in the early 1990s. We give a concise description of the crises, including the background, the evolution of the main events, and the government policies to handle the crisis. We discuss the consequences for the real economy, and try to isolate what explained the emergence of the crises and the relatively speedy recoveries. We conclude that the crises were due to a combination of extraordinary shocks and serious mistakes, both in macro policies and in regulatory policies. The crises were preceded by a fundamental financial liberalization in both countries, but this was not sufficient cause for them. The crises exacerbated macro-economic problems primarily through their impacts on borrower balance sheets. However, evidence of a so-called credit crunch remains weak. Crisis management was fast and strong-handed. In both countries, the financial sectors were substantially restructured, and recovered from the crisis relatively quickly.