Consultation response regarding Review of the Riksbank's Monetary Policy 2010-2015

FI as submitted its consultation response regarding Review of the Riksbank's Monetary Policy 2010–2015 (2015/16:RFR6) conducted by Marvin Goodfriend and Mervyn King on commission from the Committee on Finance. The consultation response assesses the reviewers' recommendations regarding financial stability and the interplay between monetary policy and financial stability.

The main points of FI's response can be summarised as follows:

  • FI agrees with the recommendation that FI without further delay should be assigned the requisite authorisations and tools in its area to counteract financial imbalances in credit markets. A framework for macro-prudential policy should be presented promptly. The Government Offices or a special investigator appointed by the Government should be able to prepare such a proposal.
  • FI opposes the proposal that FI and the Riksbank shall establish a joint committee for macro-prudential policy. The decision to assign FI responsibility for macro-prudential policy should be left unaltered. Outstanding coordination issues within macro-prudential policy primarily relate to the distribution of responsibility between the Government and FI.
  • FI welcomes a clarification of the Riksbank's role in financial stability. This clarification should refer to the Riksbank's specific responsibility and authorisations to support the supply of liquidity in a crisis.
  • FI agrees that macro-prudential policy should be evaluated in due course. This evaluation should be done when more experience has been gained from applying macro-prudential policy in Sweden and other countries and thus later than that proposed by the reviewers.
  • FI supports the recommendation that the Riksbank should take a pragmatic approach to the numerical inflation target. The Riksbank should take a more long-term view of the inflation target in situations where it makes the assessment that drastic measures would be required to achieve the target within the normal time horizon. However, there should not be any direct re-prioritisations between the inflation target and other targets, e.g. financial stability.