Stefan Ingves: A cure for crises – confidence, confidence and trust Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Eurofi Forum, Gothenburg, 29 September 2009. *  *  *  It is an honour for me to hold this keynote address at the EuroFi-conference here in Gothenburg. We have recently witnessed a financial crisis of historic proportions. We may have seen the worst, but the crisis is not over. The development of the last year gives me an excuse to address a topic that has followed me for much of my working life: namely financial crises and trying to sort them out. I could go on and talk about financial crises for hours, but I promise you that I will stay – at least roughly – within my time limit. I have been working with the resolution of financial crises for almost two decades. I started out, here in Sweden, with the banking crisis of the early 1990s. Later, I toured the world as an IMF employee, assisting in crisis resolution in many different countries, and I came to know many difficult situations from within. In my present role, the last year has, to a large extent, been about dealing with the repercussions of the latest financial crisis. One difference this time is the magnitude and the global reach of the crisis – it is not really just any other domestic crisis. However, I do believe that financial crises are related creatures – or monsters if you prefer.
The Governors of the Nordic countries have built trust for a long time. This building of trust dates back to the 19th century. Although it is not very widely known, in 1873, Sweden, Denmark and Norway formed a monetary union based on the gold standard. This union was eventually dissolved in 1924. However, I believe that one legacy of the union has been that the Governors of the Nordic Central Banks – adding Iceland and Finland to the group – have continued to meet regularly since then. This tradition of regular meetings has built trust. It has taken some time, but today the trust is there. The Nordic example shows that trust between authorities can be achieved, but that trust takes time to build – so patience is warranted. At the same time, we need to start getting this process going immediately. On a European level, I think that the MoU can enhance crossborder cooperation by increasing harmonisation, regulatory convergence and, not least, by building trust. Consequently, we should continue to fully implement the MoU. We are working on this in the Nordic and Baltic countries and are currently establishing a Nordic-Baltic Voluntary Specific Cooperation Agreement. This may serve as an example and, although it may take some time, I am confident that we can increase trust in Europe as well. BIS Review 118/2009  5  Conclusion In my speech, I have talked about confidence and trust. Confidence is essential for a wellfunctioning financial system.