“Assessing risks to financial and macroeconomic stability from housing prices and household debt: The Swedish case,” presentation at the workshop “Addressing housing market imbalances,” European Commission, December 6, 2019. Slides.
Several things are right with Swedish macroprudential policy. But regarding potential risks associated with household debt and housing, the policy is wrong and does not pass a cost-benefit analysis. The substantial credit tightening that the FI, the Swedish FSA, has undertaken—through regulated amortization requirements, but also in other ways—has no demonstrable benefits but substantial individual and social losses. Several reforms are required for a better-functioning mortgage market. The governance of macroprudential policy also needs to be reformed.