Riksbank's risk survey autumn 2011
The risk most likely to affect the Swedish financial system is that a country in the euro area will be unable to fulfil its financial obligations as a result of insufficient public finances. This opinion is expressed by participants in the Swedish fixed-income and foreign exchange markets in the Riksbank's risk questionnaire. A majority of the respondents also consider that the Swedish financial markets function less efficiently now than they did six months ago. They believe this is mainly due to higher volatility and in some cases poorer liquidity in the markets.
The survey also shows that 60 per cent of the respondents consider that their risk propensity has declined over the past six months. A majority also believes that their propensity to take risk will remain unchanged over the coming six months. Many respondents cite the sovereign debt problems in Europe as the main reason for the decline in risk propensity.
The participants also consider that some of the new regulations in the financial sector, such as Basel III and MiFID, risk disrupting the functioning of the markets and may lead to increased funding costs. They also think that falling Swedish bond yields over the past six months and a possible political deadlock in the United States could entail problems for the Swedish financial markets. The market participants believe that in the coming period the main focus will be on sovereign debt crisis in the euro area, the economic and financial positions of United States and China as well as coming regulation of the financial sector.
Since spring 2008 the Riksbank has carried out its own twice-yearly survey of participants in the Swedish fixed-income and foreign exchange markets. The questions in the survey refer to the participants' views on risk and also to their opinions regarding the functioning of the markets. The Riksbank's autumn 2011 survey was carried out in October. It can be downloaded as a PDF from the Riksbank's website, www.riksbank.se.