Riksbank's first deputy calls for macro-prudential measures that directly limit household debt
Kerstin af Jochnick suggests amortisation requirements and ‘review of tax deductions for interest paid'
Sweden's framework for macro-prudential policy makes it possible to implement more precise measures to manage household indebtedness, but has so far mainly resulted in sharper capital adequacy requirements for the banks, Kerstin af Jochnick, the Riksbank's first deputy governor, said today in a speech in Stockholm.
She called for a broader spectrum of measures to influence household indebtedness in a more sustainable direction, characterising measures to directly limit household indebtedness as an important piece missing from the macro-prudential "puzzle".
Af Jochnick said the Riksbank's interest rate cut in July was necessary to attain the inflation target, but also added that "low interest rates could increase the risks linked to household indebtedness. Major demands are therefore being made of other policy areas to deal with these risks".
She mentioned as examples amortisation requirements, a review of the tax deductions for interest paid and measures to increase housing construction.
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