As a consequence, interest rates in Sweden  19  For a theoretical discussion about the consequences of financial imbalances on flexible inflation targeting, see Woodford (2012). 20  See Giavazzi and Mishkin (2006), Goodhart and Rochet (2011) and Goodfriend and King (2016). See also Bryant, Henderson and Becker (2012). 21  See Mitelman (2013), Schück (2015), Sydsvenskan (2015) and Dagens Industri (2015). 10  BIS central bankers’ speeches  would remain at today’s extremely low levels for even longer to come. 22 For reasons I will shortly outline, it would, however, be more difficult to counteract economic recessions in the future, if inflation, inflation expectations and the average nominal interest rate were to remain permanently at very low levels. The international debate has not concerned itself too much with globalisation and digitalisation having lastingly held back inflation. Instead, it has been argued that central bank inflation targets should be increased. 23 One reason for this is that real, long-term interest rates have fallen by about 4.5 percentage points around the world over the past 30 years. 24 One consequence of interest rates being much lower than twenty years ago is that it has severely restricted the scope for central banks to cut their policy rates when the economy has been weak or inflation has undershot the target. One way of dealing with this is to raise the inflation target.
I said at the outset that a nation needs an efficient and secure payment system. If it does not function, that nation’s currency will lose its place in the monetary system. And therefore, for every central bank that issues a currency, it is important to govern and control developments in the payment system. This is the core issue: Only Norges Bank can provide final and secure settlement in Norwegian kroner. This will be the fundamental tenet for ensuring that the payment system in Norway continues to be efficient and up-to-date. 5/5  BIS central bankers' speeches