A new regulatory package, called the Final Basel III Framework, can have significant negative effects on the Swedish banking sector and real-economy.

The higher levels of required capital could increase the borrowing costs for Swedish businesses by some 0.38 percentage points, corresponding to a price increase of 30%.

We find this could lead to a permanent reduction in GDP of around 0.7%. In contrast, the benefits are negligible, given the current level of capitalisation of Swedish banks.

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For further information, please contact Senior Economist Jonas Bjarke Jensen