Ingves: Financial stability is important for us all
On Thursday, Governor Stefan Ingves participated in the Riksdag Committee on Finance’s public hearing on financial stability from a consumer perspective. Mr Ingves began the hearing with the speech “Financial stability is important for us all”. The speech illustrated the risks that financial instability poses to households. A financial crisis has negative effects on the citizens of Sweden in their roles as employees, taxpayers and bank customers. The citizens are therefore entitled to expect the authorities to be able to effectively prevent financial crises and to manage them if they nevertheless occur.
Mr Ingves began by noting that financial crises have serious consequences for society and its citizens. Experience shows that a financial crisis hits households hard in their roles as employees, taxpayers and bank customers. Ultimately, a serious crisis can threaten even more basic functions in society. Mr Ingves exemplified the long-term effects of a crisis by saying that almost 11 million US mortgage borrowers still owe more than the market value of their homes.
As far as Sweden is concerned, he was positive about the dampening effect of the mortgage ceiling revealed by Finansinspektionen's report earlier in the week. However, he warned about the vulnerabilities on the mortgage market that are still in evidence and that the European Commission, among others, has expressed concern about. In this connection he emphasised the need for the EU's member states – in line with the Basel III regulations – to be given the possibility to manage the risks that exist at the national level by imposing stricter demands on their financial sectors.
Stefan Ingves concluded his speech by reminding the hearing that the households need both an effective financial system and protection from the effects of financial crises. All citizens should therefore be able to expect the authorities to do their utmost to prevent financial crises and to prepare to manage them if they nevertheless occur. The authorities need the right tools to perform this important task. The ability of the authorities to work effectively to prevent the occurrence of new crises is in the interests of all the citizens of Sweden.
Read the entire speech in the PDF file below.
