35 See also the article “The coronavirus is highlighting the need for flexibility in the new Sveriges Riksbank Act” in Sveriges Riksbank (2020b). 16 [35]  With hindsight, we can say that the measures together contributed to being able to avoid a credit crunch and to maintaining the stability of the financial system. 36 Other contributing factors were measures taken by other central banks and other Swedish authorities. At the same time, we avoided a larger and more lasting downturn in the economy, which was positive for inflation prospects, for instance. In other words, there was no conflict of interests between on the one hand maintaining financial stability, and on the other hand supporting the real economy, as well as maintaining price stability. The pandemic showed, as I see it, that the Riksbank needs in certain situation to use a combination of several tools – not just the policy rate – to obtain the desired effect. The tools need to be fit-for-purpose under different conditions and in situations that can be difficult to specify in advance. It must also be possible to use them with a large degree of flexibility. This is particularly important when a combination of measures is needed. 37 The Government has in its proposal for a new Sveriges Riksbank Act proposed several restrictions to practical monetary policy. These include narrowing the definition of what is regarded as monetary policy, compared with the present one, and also restricting the Riksbank's power to use different monetary policy tools.
The longer inflation is deliberately allowed to deviate from 2 per cent, the greater the risk that one begins to question what target the bank really has. We have seen elements of this in the recent debate on monetary policy in Sweden. This could also have significance for how the central banks’ principals perceive the way monetary policy is conducted, which can ultimately affect the banks’ mandate and position. The Riksbank has a mandate to work independently to maintain price stability and, without prejudice to this, to support the goals of general economic policy. On the one hand, this means that it is up to the Riksbank to determine which risks are relevant for its decisions. But on the other hand, the Riksbank is accountable to the Riksdag, which determines the Riksbank’s mandate. The Riksbank therefore needs to be able to show in a convincing manner that the trade-offs it makes are anchored in its mandate. And given the current mandate, it may be a problem if one accepts deviations from the inflation target over a long period of time. If the trade-offs in monetary policy are not clear and concrete, it will be difficult to assess whether it has been conducted in a reasonable manner and within the mandate. The costs are clear, but what have we gained?