A stable, well-functioning financial market for allA stable, well-functioning financial market for allThe stability of the Swedish financial sector (2004:9) - a summary
The Swedish life-insurers, previously severely hit by declining eq-uity prices, have clearly improved their financial performance during 2004. However, some of the companies are still vulnerable, due to low solvency. This requires a continued close monitoring by Fi-nansinspektionen
The large banking groups are financially strong with very low credit losses and with a modest growth when it comes to risk exposures. This, coupled with a likely further improvement of general eco-nomic growth, and an ongoing improvement of risk management, means that risks to systemic stability are small for the foreseeable future. In a longer perspective, however, the expansion of their busi-ness abroad, including the Baltic states and Russia may imply increasing risks. Mortgage lending is also one area where risk expo-sures are growing. Finansinspektionen will monitor these developments.
In the near future, two important regulatory complexes will be implemented in Sweden as well as in many other countries – the new Basle accord on capital requirements ("Basel II") and the IFRS/IAS on the accounting side. Both will have important implications for financial firms, especially for the banks. At the same time it is difficult to foresee all the effects and implications these changes may have, and even more so, the possible effects they may give rise to in combination. Therefore, the implementation has to be monitored closely by Finansinspektionen.
