A leverage ratio requirement could contribute positively to financial stability during normal conditions in that it increases the robustness of banks' capital adequacy.
FI has identified a number of quantitative indicators that point toward factors in the insurance sector that could have an effect on financial stability. These indicators show that there was good resilience in the insurance sector at the end of the year.
House prices have been rising and, as a result, so has the debt of households in relation to their income – i.e. their debt-to-income (DTI) ratios. A DTI limit could slow this trend, but limiting households' opportunities to borrow would also slow consumption and economic activity.
This FI-analysis introduces a model for household debt in Sweden.
The market for covered bonds is important for bank funding and therefore financial stability. The requirements for banks to hold more capital and liquidity for their operations have been tightened since the financial crisis. These requirements affect the banks' costs of holding securities in the trading book and so their costs of acting as market makers.
FI regularly monitors the vulnerabilities in the financial system. FI is now taking this a step further by creating a categorization for grouping and studying indicators of vulnerability. A systematic review of indicators helps to identify and follow vulnerabilities, which makes it easier to understand the risks of financial or macroeconomic instability.
FI has decided to launch a new report series, FI-analysis. This is our first report in this series where FI presents studies and analysis of questions that is of particular importance to FI.