Sweden: Selected Issues Paper

Sweden’s banking system meets most standard measures of financial soundness. But with its verylarge and wholesale-dependent banking sector, high and increasing household debt, and resurgenthouse price growth, additional measures are needed to contain mounting financial stability risks.On the supply side, this means continuing to strengthen capital and liquidity requirements.However, theoretical and empirical evidence points to a need to also limit credit demand, includingthrough effective steps to increase the rate of mortgage amortization.