Cumulative impact of financial regulation in Sweden

The BIS and the EU Commission are about to complete a regulatory package, dubbed “Basel IV”, which is a reform of the banking sector regulation initiated in the wake of the financial crisis. The package contains a new element called “capital floors” that will substantially increase the capital requirements of Swedish banks. This package comes on top of the already extensive measures put in place in Sweden over the last eight years.  In addition, new macro-prudential measures are being considered to reduce the risk to financial stability in the future.

It is against this background that the Swedish Bankers’ Association has asked us to analyse the costs and benefits of further tightening financial regulation in Sweden.