Ulf Dahlsten gave a presentation at the Stockholm School of Economics on March 22nd, 2014 about combating debt addiction and stabilizing the financial system. He argued that more needs to be done as the system has issues like extreme pro-cyclicality, underestimating endogenous risks, excessive money creation, growing private debts, asset inflation, and complexity. He focused on these problems and asked questions about addressing excessive money creation, the danger of private debt buildup, curbing asset inflation without hurting the economy, and what central banks, regulators, and politicians can do to help.

1. COMBATTING THE DEBT
ADDICTION
Ulf Dahlsten
At the Stockholm School of Economics
22 March 2014

2. MUCH MORE NEEDS TO BE DONE
TO STABILIZE THE FINANCIAL
SYSTEM
 Extreme pro-cyclicality
 Endogenous risks are underestimated
 Excessive money creation
 Growing private debts
 Asset inflation
 The system has become extremely complex and
inter-connected
 Lack of transparency, uncontrolled third-party-risks
 Maturity mismatches
 Too many incentives in favour of risk-taking
 Global imbalances are not addressed

3. THE FOCUS TODAY IS ON
 Extreme pro-cyclicality
 Endogenous risks are underestimated
 Excessive money creation
 Growing private debts
 Asset inflation
 The system has become extremely complex and
inter-connected
 Lack of transparency, uncontrolled third-party-risks
 Maturity mismatches
 Too many incentives in favour of risk-taking
 Global imbalances are not addressed

4. QUESTIONS
Do we have an excessive money
creation?
How dangerous is the build-up of
private debt?
How to curb asset inflation without
depressing the economy?
What can the central bank, the macro-
prudential regulator
Finansinspektionen and the political
level do?