I consider this criticism to be a little strange and to make too many assumptions in advance. It seems to assume that there is already a framework for macroprudential policy in place in Sweden, which clearly states what instruments are to be used and by whom. Let us assume, for instance, that the Riksbank had held the policy rate at 0.25 per cent up until now, as was the case in the counterfactual experiment I mentioned earlier, and that this had meant that lending to households and housing prices had begun to rise sharply again. Would it really have been obvious how this should have been managed and by whom? Bearing in mind how the risks in this field have been allowed to increase in Sweden over the past 15 years, I doubt that this would have been the case. In other words, I believe we are still a long way from a satisfactory situation. I am quite convinced that for this to work the allocation of responsibility must first be clearly specified and there must be clear guidelines for what should be done. However, a potential framework for macroprudential policy is only under investigation. The Financial Crisis Committee has presented a partial report that was recently circulated for consultation. But it is not likely that a complete solution will be in place in the very near future.
Household debt and housing prices were a fairly hot topic on the Riksbank's monetary policy agenda a relatively long time before the global financial crisis broke out.22 Moreover, Sweden is usually regarded as one of the few countries that has in practice applied a policy that, to some extent at least, "leans against the wind".23 The dominant view prior to the crisis was that central banks should not actively try to counteract the build-up of financial imbalances, but should act forcefully once a crisis had occurred. Instead of "leaning against the wind", they should in other words make do with "mopping up afterwards" – they should "clean but not lean". Trying to take preventive measures was perceived as too difficult and too costly, while it was assumed that it would not be very problematic to quickly clean up after a crisis. After the crisis - greater emphasis on preventive measures There is no doubt that the view has changed considerably since the financial crisis.24 In many countries, the combination of high household debt and a fall on the housing market marked the start of a period of weak demand, high unemployment and very weak public finances – problems that several countries are still struggling with. Cleaning up afterwards proved to be much more difficult than anyone had thought. One lesson from the crisis is thus that one must take much more preventive action and try to counteract a development with rapidly-increasing debt and housing prices.