And the reason I am doing so now is that it may be a good starting point for distinguishing what monetary policy may achieve in the short and long run. We can note already that the policy areas I recently mentioned concern politics in a broad sense and not monetary policy. It is thus not monetary policy that can affect these most fundamental conditions for long-term growth. One illustration of monetary policy’s limited potential to affect employment in the long term is the disparate regional developments in one and the same country. In Sweden, for instance, there are large regional differences in employment levels, despite monetary policy being the same for all regions. These differences appear to be lasting, which might indicate that they are due to underlying, structural factors that are beyond the control of monetary policy. However, monetary policy can affect the conditions for long-term growth on one very essential point, namely by keeping inflation close to the target and inflation expectations anchored around the target. If inflation deviates from the target the Riksbank’s aim is normally to bring it back on target within a couple of years. Depending on how large the deviation is and its cause, the time horizon may be extended. This flexibility makes it possible for the Riksbank to take into account developments in the real economy in its monetary policy considerations. In the short term, monetary policy can contribute to reducing the fluctuations in production and employment that arise during an economic cycle.
Kalin Hristov: Monetary unions in history Welcome remarks by Mr Kalin Hristov, Deputy Governor of the Bulgarian National Bank, at the Conference “Monetary Unions in History”, jointly organised by the Bulgarian National Bank and the European Association for Banking and Financial History (eabh) e.V., Sofia, 1 July 2022. * * * Dear Members of the Association, Dear conference participants, Ladies and Gentlemen, It is an honour to welcome you to this conference which the Bulgarian National Bank organises in cooperation with the European Association for Banking and Financial History. I am also delighted to have this event, together with yesterday’s workshop on the “Digital rebirth of historical datasets”, taking place in Sofia alongside the annual meeting of the Association. This year marks twenty years since the Bulgarian National Bank became a member of the Association; this is the first time, however, that an annual meeting and events of the Association are hosted in Bulgaria. Let me, therefore, extend words of gratitude for the excellent cooperation with the Association regarding the organisation of this series of events. The Bulgarian National Bank is one of the oldest central banks in the world, thirteenth by order of its establishment in 1879. Our institution has understandably cultivated a profound respect for banking and financial history, as seen from our topical publications and research projects we take part in. For us history is also vibrantly present today – exactly twenty-five years ago, 1 July 1997 was the day of introduction of the currency board in Bulgaria.