The difficulty is increased by the “neutral” real interest rate changing, for instance when the productivity growth in the economy changes. On the basis of experience, simple rules of thumb and rough calculations, everyone can per se obtain an idea of how monetary policy operates. However, this is another area that needs to be developed. Altogether, this review shows that monetary policy decisions can never be made mechanically with the aid of simple rules of thumb. In order to firm up the analysis and make it easier to describe the basis for our decisions, it is notwithstanding this important to describe and keep to a conceptual framework, around which we construct our analysis. As we gain increased knowledge, our analysis and conceptual framework are complemented or modified. In order not to lose clarity, we endeavour in our inflation reports, speeches and publications to describe our analytical apparatus and its development. Challenges in the present situation The growth prospects for the Swedish economy have improved considerably in recent years. The Riksbank has been successful in creating support for and making the inflation target credible, central government finances have improved and many structural reforms have been carried out, although much remains to be done. However, although for the most part, it looks good, there is a risk that the Swedish economy is now growing too rapidly due to over-optimistic assessments of growth prospects. This must in my view be taken into consideration in the conduct of monetary policy.
Given the cross-border nature of MMFs, it is important we work together internationally to ensure that we are aligned in our objectives, and adhering to common principles, even if the precise implementation varies a little to reflect the specific nature of each jurisdiction’s markets. The dash for cash provided an unwelcome reminder that the post financial crisis did not finish the job and left a dangerous gap in our exposure to the risk of financial instability. We must finish the task this time. Thank you. I am grateful to Imane Bakkar, Adam Brinley-Codd, Alice Carr, Geoff Coppins, Edward Denbee, Steven Dodkins, Lee Foulger, Karen Jude, Clare Macallan, Nick McLaren, Jon Relleen and Konstantin Wiemer for their assistance in helping me prepare these remarks. 1 The International Accounting Standard 7Opens in a new window defines cash equivalents as “short-term, highly  liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value”. 6/6  BIS central bankers' speeches