Another example is that the Riksbank has entered into what are known as swap agreements with the Fed and the ECB, which means that if necessary we can borrow dollars or euro in exchange for Swedish kronor. This type of swap agreement is, put simply, an agreement to buy a currency at a particular time and to sell it back at a later date. A further measure is that we accept more types of security as collateral when the banks borrow money from the Riksbank. Moreover, the Riksbank has in different contexts extended the list of eligible counterparties so that more financial agents will have the chance of easier management of liquidity and funding. Need to coordinate? “Exit strategy” is a buzzword that has been used for a while now. There is currently much discussion on how and when the measures taken around the world during the financial crisis are to be phased out. One question that is highlighted is that international coordination might be necessary for some of these processes. Some of the discussion concerns timing and how “aggressive” one can be when slowing down the powerful stimulation from fiscal and monetary policy. If one eases up on the stimulation too soon and too hard, it may jeopardise the economic recovery. If one instead eases up too late and too little, there is a risk that inflationary pressures will be too strong. Here I believe that every country must make its own assessment, as conditions differ in different countries.
BIS Review 138/2009  5  Figure 6. GDP with uncertainty bands, annual percentage change, seasonally-adjusted data 6  6  4  4  2  2  0  0  -2  -2 90%  -4  -4  75% 50% O utcome  -6  -6  Forecast  -8  -8 04  05  06  07  08  09  10  11  12  Sources: Statistics Sweden and the Riksbank  I and my colleagues on the Executive Board want the growth curve to look like a “v” when the economy recovers after the recession, as in the figure with our forecast for GDP growth, and not a “w” (see Figure 6). Having said that, let me just briefly comment on my own view of monetary policy as expressed in the minutes of our most recent monetary policy meeting. As I see the situation with regard to the Swedish economy, it is more important to allow some safety margin for a weaker outcome than for a stronger outcome. In my opinion, it would be more problematic if the recovery ground to a halt because we had provided too little stimulation than if we were later forced to put the brakes on a little harder than expected. So where do we stand with regard to the financial system? Where we stand in terms of the economic cycle is to some extent connected to developments in the financial markets.