Donald Kohn, former deputy chairman of the Federal Reserve Board of Governors and now member of the Bank of England's Financial Policy Committee, recently put forward another aspect: “When one policy is leaning so hard in a particular direction, the other can’t compensate, can’t achieve its objectives. … So for example, the example that’s often used, very easy monetary policy builds imbalances that may be so large, that may become so large they can’t be countered by regulation.” (see Talley, 2013). 18  For example, Norges Bank writes in an article about the countercyclical capital buffer: “The countercyclical buffer will strengthen the resilience of the banking sector during an upturn. It may also, to some extent, counteract the build-up of financial imbalances, but the effect is uncertain. Thus, Norges Bank cannot disregard taking financial imbalances into consideration when setting the key policy rate.” (Norges Bank, 2013, p. 23)  10  BIS central bankers’ speeches  central banks, one could say that one consequence of the crisis has been an increased divergence in central bank policies. As in other countries, we in Sweden must now try to find good solutions, on the basis of the conditions applying, for designing the interplay between macroprudential policy and monetary policy. I am convinced that we will succeed in this task, with join efforts and as we gain greater knowledge of how the new upcoming framework for macroprudential policy functions in practice. References Aikman, David, Haldane, Andrew G. and Nelson, Benjamin (2011), Curbing the Credit Cycle.
During the recovery phase after the crisis, the Riksbank has also tried to reduce the risk of exaggerated indebtedness and overly-inflated housing prices by conducting slightly less expansionary monetary policy than would otherwise have been the case. 6  See, for example, Mishkin (2007) and Cagliarini, Kent and Stevens (2010). Heikensten (2008), writes: “With house prices increasing drastically, risks for the real economy have been perceived to be bigger. On a few occasions in 2004–05 the Riksbank did for that reason not follow a strict inflation-targeting rule. We “leaned against the wind”, in the sense that we did not take rates down as quickly as we could have done considering the outlook for inflation alone.” The development of house prices and household debt have long been on the agenda of the Riksbank’s Executive Board, see for example Srejber (2002). 7  Ingves (2007). I said, for instance: “[W]hen we observe long periods of high growth rates in asset prices and debt, growth rates that appear to be unsustainable in the long run, our view is that it is not reasonable to completely ignore that there may be risks associated with this[. ]…What this view has meant in practice is fairly marginal changes in the timing of our interest rate changes, and substantial oral and written focus on the issue.” This problem is also taken up in Ingves (2010).