‘Urgent’ measures needed to counteract household debt – Riksbank report
Finansinspektionen needs powers to implement effective macro-prudential policies, report says
Sveriges Riksbank has said a combination of measures is urgently needed to reduce risks linked to household indebtedness.
In the Swedish central bank's latest financial stability report, the bank said measures are needed to address the underlying causes of indebtedness – for example, targeting the housing market to attain a better balance between supply and demand.
"It is also important to have macro-prudential policy measures. For instance, a debt-to-income limit – that is, a limit regarding the size of debts in relation to disposable income," the Riksbank said.
The report emphasises a debt-to-income limit could be an "effective tool" in limiting risks linked to household indebtedness, calling on the government to grant Swedish financial regulator Finansinspektionen the decision-making powers needed to conduct "effective macro-prudential policy".
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