20  See for example Kydland, Finn and Edward Prescott (1977), “Rules rather than discretion: The inconsistency of optimal plans”, Journal of Political Economy, vol. 85, pp. 473–490. 21  The February Monetary Policy Report discusses the macroeconomic consequences of a fall in housing prices in the article “The household balance sheet and the macroeconomic assessment”. 14  BIS central bankers’ speeches  imbalances rather than to financial stability. They are also imbalances that must be viewed in a much longer perspective than the perspective we usually adopt when we make decisions about the repo rate. Financial and macroeconomic imbalances of this type can of course result in financial crises, but do not do so automatically. We should therefore distinguish between avoiding such imbalances and avoiding crises than threaten the financial system. In both cases I believe that we need an active policy alongside the standard stabilisation policy. I am sure that everyone agrees that the Riksbank has a central role to play in analysing the emergence of financial and macroeconomic imbalances. However, what the role of the Riksbank should be when it comes to deciding on measures to counteract imbalances in the longer term is a more open question at present. In my view, it is important that macroprudential policy is put in place as a separate policy area. This would be good for financial stability, but also good for macroeconomic stabilisation.
Hopefully, I have managed to shed light on some of those principles today. Thank you for your attention. 4  BIS Review 45/2007  BIS Review 45/2007  5  6  BIS Review 45/2007  BIS Review 45/2007  7  8  BIS Review 45/2007  BIS Review 45/2007  9  10  BIS Review 45/2007  BIS Review 45/2007  11