This probably means that extensive bond purchases will play a larger role than before when we want to affect rate-setting in the economy and contribute to financial stability. It is therefore problematic that the Government’s proposal for a new Sveriges Riksbank Act suggests several restrictions to practical monetary policy. The Government’s proposal for a new Sveriges Riksbank Act is problematic Quite recently, the Government decided on a proposal for a new Sveriges Riksbank Act. The proposal is now with the Council on Legislation and later this year or next year the Riksdag will take a stance on the proposal. I note that a number of changes have been made with regard to the views expressed by the Riksbank in the consultation last year. This is good. However, I am still worried about the usability of the act in practice. This concerns above all an artificial division between our two core tasks of price stability and safeguarding the financial system. Our 23 [35]  tools for attaining these objectives are divided into two different chapters – despite this being a question of largely the same tools. This is problematic. It all comes down to how we use our balance sheet. Let me take an example from the financial crisis 2008-2009.
I think this is unfortunate, as it will limit the Riksbank's capacity to safeguard a smoothly-functioning financial system. 38 The Sveriges Riksbank Act should be flexible and not govern in detail under what conditions and in what sequence monetary policy tools should be used. Technical and detailed limitations linking different items on the Riksbank’s balance sheet to different purposes – as the Government proposes in its new bill – would make it difficult to adapt monetary policy to the requirements of a particular situation. My picture is that the draft law deviates from international practice in the area of monetary policy and goes completely against the experiences that we have gained during the pandemic and earlier crises. I find it difficult to understand what one intends to achieve with the new proposal. The role of the balance sheet in monetary policy The Riksbank has several tools it can use in its monetary policy. Most people are familiar with the Riksbank’s policy rate. This is a short-term and risk-free interest rate that affects interest rates with a longer maturity, risky rates and ultimately the interest rates charged to households and companies. The impact of the policy rate on other interest rates can vary over time, and depends on factors such as the situation in the economy, conditions on the financial markets, and the structure of the financial sector. The Riksbank's other tools can be divided up, somewhat simplified, into extensive asset purchases and various forms of direct liquidity support to the banks.