Nor has there been reason to take any measures on the basis of our other task, safeguarding financial stability. Swedish banks are profitable and financially strong, and therefore have good opportunities to manage unexpected negative events. The role of central banks in times of financial turmoil The role of central banks is to safeguard economic stability. We can do this best by focussing on achieving our objectives, that is, price stability and financial stability. However, the recent developments in the financial markets have illustrated the importance of increased cooperation both with other Swedish financial authorities and among countries’ central banks. One important challenge is to manage financial crises which risk spreading across national borders. In December 2007 and March 2008 the Federal Reserve, the Bank of England and the ECB coordinated measures to meet the banks’ needs of short-term financing. The Riksbank expressed its support for this action, although we did not consider it necessary to take corresponding measures in the Swedish financial system. BIS Review 51/2008  7  It is not self-evident what the role of the central bank should be when uncertainty and financial turmoil create problems in certain parts of the financial markets. The fact that central banks take measures to ensure the targeted interest rate is at the right level may appear reasonable. Similarly, we can observe that several central banks see arguments in favour of also influencing interest rates with a slightly longer duration.
On the other, there remains the risk of a default in Greece having an impact on global financial markets and GDP growth in the Eurozone. While these are still significant risks, the ability of the larger  BIS central bankers’ speeches  3  central banks to handle these situations has improved, reducing to some extent the intensity of the negative impact of such events. This is not to say that there are no associated risks or that their persistence for so long would have lesser effects. A positive note is the more consolidated growth in the Eurozone, which has helped to configure a more balanced global economic scenario. In the emerging economies, there are still significant risks. While the risk of commodity prices dropping further seems to have eased, Latin American economies have been weaker for longer than expected. This has occurred in a context where the high fiscal and current account deficits persist in many economies, making the necessary adjustments expensive and difficult to implement. The risk of slower growth in China and its implications for the copper prices remains, although the Chinese authorities have given proof of their ability and desire to avoid abrupt corrections in their economy. Domestically, the economic recovery in the second half of the year should be accompanied by a significant improvement in confidence indicators, but so far it has not happened.