6 In a nutshell that is why, over long periods of time and across wide ranges of countries, well-functioning finance has supported wealth-creation and well-being. The other, more obvious, way of capturing why finance matters is to see what happens when it goes wrong. Then it can quickly take large chunks out of the capital our societies have, over time and at great cost, painstakingly accumulated. That crumbling of capital, in its broadest sense, is the reason financial crises have been about as costly as any event societies have ever faced historically, war and revolution excepting. Capital, for these purposes, has more than one face. The collapse of capital during financial crises shows up, most obviously and immediately, in measures of financial capital (the values of bonds and shares) and physical capital (the accumulation of buildings, houses, plant and machinery). And because we assign monetary values to these concepts, and obsess about them in the media, these losses of capital are clear and visible. Yet it is another form of capital that may matter every bit as much to wealth and well-being in society – social capital. There is neither a standard definition, nor a simple means of measuring, social capital. In general, social capital refers to the relationships, trust and  3  Carney (2015). 4  For example, Levine (2005) and Beck (2012). There is also evidence finance fosters entrepreneurship (Guiso et al (2004)) and reduces poverty and inequality (Beck et al (2007).
Two weeks after each meeting, the Bank publishes minutes, which make it clear whether there was a lack of consensus in the Committee. Publication of the minutes is required by law. An account of the implementation of monetary policy is provided in the Annual Report. All committee members are free to express their personal views on economic issues and monetary policy. In Sweden, too, interest rate decisions are made by a board of experts – the Executive Board. The members work full time, and participate in the daily operations of the central bank. An inflation report expressing the Executive Board’s collective view of the inflation outlook is published four times a year. As in the UK, special emphasis is placed on the individual responsibility of the Executive Board members. The individual members’ voting and assessments are disclosed. Any lack of consensus regarding the inflation outlook and setting of interest rates emerges from the minutes that are published from two to four weeks after each monetary policy meeting. Grounds are given for decisions on interest rates, but no press conference is held immediately after monetary policy meetings. The Executive Board does not directly announce its stance regarding interest rate movements in the period ahead, but this is implicit from the uncertainty associated with the projection, which Sweden’s Riksbank also illustrates by means of a fan surrounding the inflation projection. The Executive Board reports twice a year to the Swedish parliament, the Riksdagen.