This can be compared with the 1970s and 1980s, when inflation was at an average rate of around 8 per cent and growth amounted to an average level of 2 per cent. This positive development is due to a large number of factors. One factor is that there were a large number of vacant resources to begin with, but it appears likely that a more credible economic policy also has contributed. Fiscal policy has also played an important role in giving credibility to the economic policy pursued. The value of the budget consolidation can scarcely be exaggerated. Concerning the functioning of the labour market, the changeover from fixed exchange rates and a relatively high rate of inflation to flexible exchange rates and an inflation target implies that high inflation and devaluation, like those Sweden experienced during the 70s and 80s, will no longer take care of the effects of excessively high wage increases. In that sense one could say that the responsibility for employment to a greater extent has moved over to the social partners. Recent developments in the Swedish labour market During the course of 2001, growth in the Swedish economy was subdued, while inflation, excluding so-called transitory prices, rose slightly. This raises questions regarding the development of the supply  BIS Review 40/2002  1  side in the economy. A possible explanation as to why inflation has increased at the same time as demand has weakened is that the growth rate in potential output has been weaker than was anticipated earlier.
Barbro Wickman-Parak: The financial crisis from a central bank perspective Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at the Swedish Bankers' Association annual meeting, Stockholm, 12 November 2008. *  *  *  Introduction In normal times, reporting about the Riksbank is dominated by what we do, or do not do, with interest rates. The focus is usually on one of the Riksbank's two main tasks: maintaining price stability. Less attention is paid to the other main task, safeguarding financial stability; health is silent, as the Swedes say. For obvious reasons, financial stability has been given more prominence recently. We have now lived with turmoil in the international financial markets for rather more than a year and over the past two months have seen it lead to a large-scale global crisis of confidence. The origin of the current crisis, as well as of our Swedish banking crisis in the early 1990s, can be found in reckless lending practices related to property. As we now know, it began when American financial institutions lent money to borrowers with weak credit histories. Whereas the Swedish banking crisis remained altogether Swedish, the American crisis has spread like wildfire and reminded us of just how globally connected the financial markets are. The high-risk sub-prime loans were sold on to a large extent by bundling them together with low-risk loans in what are known as structured credit products. The use of these complex products grew rapidly and had a wide geographical distribution.