An extensive materialisation of risks on the Swedish housing market could also have notable effects in the other Nordic countries.
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The Finnish, Swedish, Norwegian and Danish banking sectors are large and concentrated and there are systemic risks relating to lending for the residential and commercial real estate markets.
Realisation of potential housing market risks would simultaneously increase loan and investment losses while also pushing up the price of funding.
Digitalisation is presenting traditional financial sector actors with new competitors.
The crisis is affecting banks’ business models. In the euro area, bank profitability has been eroded by the path of the economy, weak credit developments and the prolonged period of low interest rates.
Efforts are being made to prevent the outbreak of financial crises by monitoring warning indicators. When should the alarm bells ring?