According to the most recent report, the bank states that near-term risks have declined, although there is still a considerable degree of uncertainty.

Financial conditions are better than they have been in recent years, due to lower inflation and expected interest rate cuts, the bank says. Having said that, policy rates could still remain at a relatively high level for a long time, which would increase the amount of pressure on the financial system.

The geopolitical situation also has a role to play – instability here increases the risk of cyberattacks which could damage the economy.

“Geopolitical risks remain high due to Russia’s ongoing invasion of Ukraine and the conflict in the Middle East,” the bank writes.

“This contributes to increased uncertainty about, for example, how world market prices for commodities and transport costs will develop. Further escalation of these conflicts could therefore lead to negative effects on the global real economy and increased risk premiums in financial markets.”

Swedish household debt is also high compared to many other countries, and the popularity of variable-rate mortgages means that the impact of high interest rates on Swedish households has been greater than elsewhere. This has affected household consumption considerably.

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The bank argues therefore that structural reforms are needed to address what it describes as “fundamental problems in the housing market”.

It also identified consumer loans as a particular issue for many households struggling with their personal finances, as the number of households applying for debt restructuring increased significantly last year.

Here, the bank says, consumer credit banks have a significant market share and may not be carrying out adequate credit assessments for some loans.

This, the Riksbank states, could be improved by introducing a register of all borrowers’ loans to make credit assessments more transparent.

Another area of the economy heavily affected by high interest rates, the bank writes, is the property sector.

Again, the situation in the short term has improved for property companies, as interest rates and inflation have both dropped, but there are a lot of property companies which have not yet renewed their bank loans or bonds since rates first started going up, so their financing costs will rise.

In addition to this, the bank argues that Sweden’s financial structure needs to be modernised in line with the “structural transformation” taking place in Sweden and in the rest of Europe, underlining a need for a new and secure payment infrastructure.

The current company which manages retail payments in Sweden, Bankgirot, has been tasked by its owner banks to develop this new infrastructure, which provides another level of risk, as it must ensure that the current system runs smoothly during the transition to the new system.