At the same time, one should remember that we are still in the same economic playing field, with the same regulations and the same referee, constantly striving to make economic progress to achieve the best possible welfare – a process that actually has no end. Similar experiences Economic developments in Sweden during the 1980s and 1990s are very reminiscent of developments in Finland. Like Finland, Sweden underwent an overheating at the end of the 1980s, which was mainly due to an excessively high domestic demand, partly due to insufficiently tight fiscal policy, a rapid credit boom and rising asset prices in the wake of the successive deregulations - all within the framework of a fixed exchange rate regime that set limits as to how far the steering interest rate could be used to govern the level of domestic activity. The fact that Sweden and Finland did not have much to counter with when the currency crisis really got its claws into the European Exchange Rate Mechanism in 1992, should be regarded in the light of the imbalances built up within their economies over several years. It was an uneven battle, although Sweden changed its fiscal policy and the Riksbank did all it could to defend the currency, raising its steering interest rate to 500 per cent. However, Sweden was forced to abandon the fixed exchange rate as an anchor to achieve price stability in November 1992. Finland had replaced its fixed exchange rate regime earlier in the autumn.
Terrence J Checki: Observations on the global economy and financial system Remarks by Mr Terrence J Checki, Executive Vice President of the Emerging Markets and International Affairs Group of the Federal Reserve Bank of New York, at the IIF Annual Meeting of Latin America Chief Executives, Santiago, Chile, 6 March 2013. *  *  *  Good afternoon. Thank you, Tim (Adams), for the kind introduction. Let me take this opportunity to congratulate you and wish you well as you take the helm of the IIF (Institute of International Finance). It is a pleasure to be here in Santiago, and to see so many old friends among the distinguished participants. Having spent much of my early career in this part of the world during difficult times, it is gratifying to be reminded first hand of the progress the region has made. That progress is especially evident here in Chile. In my remarks this afternoon, I thought I would offer a few reflections on the current state of the global economy and financial system, and some of the challenges going forward. Let me note, for the record, that my comments this afternoon are personal, and should not be taken as reflecting the views of the Federal Reserve Bank of New York, or the Federal Reserve System. As we all know, the mood in global markets has improved quite a bit since the middle of last year: stocks are up, spreads are down, volatility is lower, and capital market activity has picked up.