STOCKHOLM, Nov 20 (Reuters) - Low interest rates and high levels of household debt make Sweden’s financial system vulnerable to economic shocks, the second of two financial stability reports this year published by the Riksbank on Wednesday said.
The central bank said low levels of interest rates meant there was an incentive to increase risk-taking in search of higher yields. At the same time, household debt levels remain very high.
“If economic development becomes significantly weaker than expected or if willingness to take risks suddenly decreases, vulnerabilities that have built up in the financial system could be exposed,” the central bank said. (Reporting by Simon Johnson; Editing by Johan Ahlander)