…and here at home Sweden has also been affected by the turbulence in the financial markets, albeit to a much lesser extent than, for instance, the United Kingdom, Germany and the United States. The fact that Sweden has been affected despite not being, as it were, involved in the problems that started the unrest is not so remarkable. We are a part of the global financial system and not an isolated northern outpost. The Riksbank governs the short-term rate that applies for one day, the so-called overnight rate, and this has remained stable around the repo rate. In brief, the Riksbank’s method of steering interest rates has worked well. But the interbank rates with slightly longer durations have risen, although not as much as in some parts of the world. This is primarily a question of different effects from the uncertainty in the financial markets, such as rising risk premiums. On the whole, the Swedish financial system and the interbank market have nevertheless functioned well. 6  BIS Review 106/2007  What is the role of the Riksbank? What does the Riksbank do when there is unrest in the money market? One of the most important tasks is to continue to ensure that the economy develops in a stable manner. We have to conduct our monetary policy so that we attain the inflation target of 2 per cent. Where possible, when the price stability objective allows scope for this, we should also ensure that production and employment develop in a balanced manner.
Swedish banks must not take this possibility for granted and thus take unnecessary risks. Here there is a link to our ambition to be open and clear. An open attitude sets limits and shows the game rules. We have clearly described how we view our role as “lender of last resort”, for instance, in our Financial Stability Report. 3 By being open about how we manage emergency liquidity assistance we reduce the risk that a situation may unnecessarily arise  3  Financial Stability Report 2003:2  BIS Review 106/2007  7  where we are forced to provide assistance. It also reduces the risk that we will be forced to provide support when this is not appropriate. Giving the right information at the right time and in the right way is important. It is particularly important in times when uncertainty is increasing. I hope that I have managed to communicate today not only the principles that have guided us with regard to our external communication in recent years, but also our picture of the recent situation. I also hope that I have succeeded in communicating that our ambition is to clearly report what we do and why. Thank you! 8  BIS Review 106/2007