Riksbank early warning indicator signals high risks
Financial fragility indicator performs better than credit gap method, economists say
Financial fragility is currently as high in Sweden as it was at the time of the 2008 financial crisis, according to a new early warning indicator (EWI) developed by economists at Sveriges Riksbank.
"The EWI, calibrated using our favourite default parameters, is roughly as high today as in 1990 and 2008, indicating a high level of systemic financial fragility, while the standard credit gap is below mean and hence signals no risk," say Paolo Giordani, Erik Spector and Xin Zhang in a commentary
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