Both the central bank and the central government can default on their payments in two ways: by not repaying the debt, or by inflating away the debt. It does happen that countries fail to repay their debts. If the debt lies with the central bank, it is more likely that it will be inflated away. Based on this reasoning, are there situations where the central bank should step into areas similar to fiscal policy? Yes, there could be such situations. One might be if an acute shortage of liquidity arises, for instance, during a financial crisis. 4 In a speech given in 2013, Larry Summers talked about “secular stagnation”. See Rachel and Summers (2019). See, for instance, Bartsch et al. (2019), Bernanke (2016), Bernanke (2019), Eichenbaum (2019), Reichlin et al. (2019) and Shirai (2019). 5  3 [7]  Central banks are better than government at creating liquidity quickly. 6 Another situation is if the market begins pricing a higher credit risk in government bonds than in central bank money. If one wants the credit risk to be transformed into an inflation risk, it may be desirable for the central bank to step in and support the government's funding, for instance by buying government bonds or through direct transfers to the treasury. A similar situation may arise in a monetary union if there is no fiscal policy at union level. But we are not close to one of these situations in Sweden today. Our public finances are in good shape. National debt is low.
The Riksbank needs to develop its work on how to take climate change into consideration in asset management. For instance, we need broader and deeper analysis of the issuers’ climate footprint. At the same time, one must remember that the foreign exchange reserves are unavoidably dominated by US and German government bonds. The Riksbank's contribution to a better development of the climate will therefore remain small. This is entirely natural. The important decisions on how climate change should be counteracted in Sweden are political and should be taken by the government and the Riksdag (parliament). 6 [7]  References Bank for International Settlements (2014), “Re-thinking the lender of last resort”, BIS Papers no 79, Monetary and Economic Department, September 2014. Bartsch, Elga, Jean Boivin, Stanley Fischer, Philipp Hildebrand (2019), “Dealing with the next downturn: From unconventional monetary policy to unprecedented policy coordination”, Macro and market perspectives, August 2019, BlackRock Investment Institute. Bernanke, Ben S. (2016), “What tools does the Fed have left? Part 3: Helicopter money”, blog post, Brookings. Bernanke, Ben S. (2019), “Monetary Policy in a New Era”, in Evolution or Revolution: Rethinking Macroeconomic Policy After the Great Recession, O. Blanchard and L. H. Summers (eds. ), Cambridge, The MIT Press. Cœuré, Benoît (2018), “Monetary Policy and Climate Change”, Speech at a conference on “Scaling up Green Finance: The Role of Central Banks”, Berlin, 8 November 2018. Eichenbaum, Martin S. (2019), “Rethinking Fiscal Policy in an Era of Low Interest Rates”, mimeo, Department of Economics, Northwestern University.