The rise of the Swedish Capital Market – a presentation by Gunnar Hökmark, chairman of the Swedish Brookers Association and former MEP, at the BIPAR Conference in Copenhagen on June 12, 2025
Speech to be delivered 11:25
Check against delivery
Dear friends,
“Wonderful, wonderful Copenhagen”, this phrase from the rather famous song, once sung by Danny Kaye, is very true to the reality. Copenhagen is a wonderful town.
When I grew up on the other side of Öresund, Copenhagen was the closest abroad you could come, another world from the stricter Sweden, here we could go to Tivoli, buy red sausages – røde pølser – and yellow Citronvand, both with food colorings strictly forbidden in the more regulated, and I must say, dull Sweden.
Here we found the flavors of life – an open mind, a readiness to have fun, and a more continental reality. When we came here, with the boat because the bridge was only a theme for decades of discussions, we met with Europe and the world.
We said Europe started here, and some of our Danish friends when looking in the other direction to our side of Öresundsaid, like teasing brothers and sisters; there is the start of Asia. But for us, and for me as a student at the University of Lund, this was where the parties started after our examines.
Those were the times, and the times have certainly changed, today we Swedes are almost as fun and international as our Danish friends, although we of course still are lagging behind, and going to Copenhagen is no longer an adventure. And I must proudly say, the Nordic countries are today more integrated than ever, a G10 economy together, so we have a strength economically and politically that I hope will have importance for the future of Europe as well as for the strength of Nato in a troubled world.
It is daily life where our countries are more integrated than ever. For sure, things have changed. In Europe, in the world and in our societies. The development of capital markets is certainly one of them.
I am happy to have this opportunity to say some words about the evolution of the Swedish capital market — an evolution and a development that can be described as a journey from suspicion towards capital to strength for investments, from control over markets to confidence in their development, and in the end, I must admit, surprise; How did all this really happen?
The explanation to this is an important lesson to us all.
You don’t create capital markets by a big political decision. You do it by a mosaic of decisions, preconditions and cultural change based upon an entrepreneurial spirit.
The deep and broad Swedish capital markets of today is a story about how institutions, tax policy, and political culture interact — and how reform, when done right, can lay the foundations for long-term resilience and trust in markets. It reflects an eco-social environment where various reforms aligned and reinforces one another.
Let’s begin where things were most fragile — the 1970s.
At that time, Sweden was a high-tax, high-regulation economy, deeply shaped by social democratic ideology. The marginal tax rate could exceed 80%, and in some cases even 90%. Capital was seen not as something to nurture but as something to control. Currency controls made it hard to move money across borders.
Wage-earner funds were introduced to gradually shift corporate ownership into the hands of trade union-dominated institutions. It was a path toward a form of socialism where business life and investment were governed by trade union officials and politicians. It was the opposite to well-functioning capital markets that we could see coming from that agenda.
There was deep political and cultural suspicion of private capital. Equity markets were stagnant. Entrepreneurs and investors, and not the least family-owned companies, often chose to leave the country rather than try to grow within it.
And yet – the seeds of change were quietly being planted.
In the late 1970s and early 1980s, Sweden introduced tax-subsidized saving funds, aiming to incentivize private citizens to save and invest. It was a tentative step toward broader capital ownership — owner democracy is a phrase once launched in UK – and a way of giving people a stake, while still keeping much of the economy under state supervision.
Around the same time, another structural shift began by new political majorities: the expansion of private apartment ownership. For decades, housing had been a largely municipally managed domain alongside private real estate companies, with the vast majority of apartment dwellers renting rather than owning.
But as more Swedes began to own their own homes — particularly through co-op style ownership — it fostered a sense of financial agency and stability. Owning assets changes how people think about society, about markets, and about the future. And it gave normal citizens a growing capital in their own home.
Then came the liberalization of the 1990s
Financial markets were deregulated. Interest rates were freed. The Riksbank gained independence. The Stockholm Stock Exchange began modernizing. For the first time in a generation, the idea that markets could serve the common good regained legitimacy.
But reform didn’t stop there. In the early 1990s, Sweden experienced a brutal banking crisis. A real estate bubble burst. Several banks collapsed. GDP contracted sharply.
What followed was painful but important. Depositors were protected; rules were rewritten. The country chose discipline over populism. That experience — of crisis met with institutional reform — left a lasting mark. It helped create a capital market culture based on accountability, transparency, and long-termism.
It opened the door to further steps.
We introduced a partially privatized pension system but in total based upon savings, not pay as you go, giving every citizen an individual pension account, with real choices and real investments. Suddenly, millions of Swedes — whether they knew it or not — became participants in the capital market.
Alongside that came a series of key tax reforms:
- The wealth tax was abolished.
- The inheritance tax was eliminated.
- And most recently, we introduced the ISK account — Investeringssparkonto — a simple, revolutionary tool that has transformed household saving.
Let me point out some of its main ideas;
The ISK account is a government-approved investment savings account. Instead of taxing capital gains or dividends directly, it applies a small annual tax based on the total value of the holdings — calculated from a notional interest rate tied to the government bond rate.
It is today not really 1%, (0,88%) and besides that there is a tax-free amount up to 150,000 SEK (nearly15,000 euros). Next year the tax-free amount will be 300,000 SEK.
This means there’s no capital gains tax when you sell, no tax reporting per transaction, and no paperwork nightmare for the average investor. The only taxation is less than 1% annually on the total sum with 150,000 SEK or as I mentioned next year 300,000 SEK tax free.
It’s predictable, it’s transparent, and it encourages long-term saving.
It has led nearly 4 million Swedes to have an account. The average account has 450 000 SEK. The average saver has 74 000 SEK on the account. And in total there is 716 billion SEK on these accounts.
In many ways, the ISK has done for financial inclusion what private apartment ownership did for housing. It normalized investing. It opened up the capital market to middle-income households. And it created a political consensus that private savings matter.
So where does this leave us today?
Sweden now has one of the most robust, trusted, and inclusive capital markets in Europe relative to GDP. Institutional investors — including insurance companies, pension funds, and foundations — play a central role in governance. Retail participation is high. Venture capital is thriving. Sweden is a net exporter of capital and a magnet for tech-driven innovation.
Needless to say, insurance brokers are and have been crucial in this development, mobilizing capital, distributing capital and facilitating investments over all the borders of traditional financial markets. The mobilization is essential, and it needs the advising but also the perspective of looking at very many different sectors of the financial markets at the same time. This is what creates the depth of capital markets but also the liquidity.
Our financial regulatory model balances market discipline with high levels of trust and transparency. That combination — not just deep markets, but deep legitimacy — is what gives our system its strength.
So, what can we take away from this story?
Let me leave you with three reflections:
- Capital markets are cultural institutions. They don’t work without public trust. And trust comes from participation, fairness, and a sense that markets serve not just investors, but society.
- Reforms are a matter of long term process. Sweden’s success wasn’t planned. It came from hard lessons, hard choices, and an openness to markets.
- Insurance brokers are not just allocators of capital. As brokers and advisers, we mobilize capital, value alternatives and recommend the investments. We are stewards of long-term trust. We build social resilience by investing responsibly, transparently, and with the future in mind.
In short: the capital market is not just about profit. It is — or can be — part of the infrastructure of freedom.
And in an era of geopolitical stress, ageing populations, and rising fiscal pressure, that infrastructure may be more important than ever.
Thank you.