This is why financial stability is about the way in which banks and financial markets function and how safe and efficient various technical payment systems are – on a daily basis, but also in crisis situations. Money is an excellent means of payment – as long as we believe that it has some value. Should we lose that belief then it only remains for us to begin to exchange goods with each other and there are many accounts as to how clumsy and costly this is, even in modern times. This is why the Riksdag has given the Riksbank the task to maintain price stability However, I do not intend to talk about the inflation target and its background today. Today I will talk about cash and other means of making payments. And this is where, just like in so many other areas, technical developments have to a great extent changed reality. Do you remember the pay packet? When holding wage negotiations, there are still discussions about “how much money will there be in the pay packet”. However, the pay packet is now a metaphor. Those of us who have seen them in reality are becoming fewer. I shall never forget when I worked at a sawmill in Ångermanland and “the chief clerk” from the office came down with the pay packets on Fridays. When one received the pay packet in one’s hand it felt as though one had truly accomplished something during the week.
A doubling of the GDP growth rate might not sound particularly exciting, but over time it has very major effects. An increase in the GDP growth rate from one to two per cent entails the standard of living doubling within 35 years instead of 70 years. For Sweden the stronger growth rate during the second half of the 19th century meant that we emerged from the developing country stage. A number of factors contributed to this development. Free trade was an important element. Our exports abroad were central to this process, which was of course facilitated by the development of the railway system. During the first decades after 1850, there were three main export products contributing to a very rapid export upturn; oats, iron and timber. The importance of exports of oats from the southern part of Sweden is something of a curiosity. Oats were the fuel of that time. All of the horses providing transport in industrial cities like London required oats and much of this came from Götaland. The construction of the railway, as well as investment in industry, housing construction and agriculture naturally required capital. This was mainly obtained from abroad. Sweden was a typical example of a country with an expansionary economy making use of saving in other parts of Europe. This borrowing from abroad was on a very large scale and, prior to the outbreak of the First World War, Sweden was probably the most indebted nation of the time.