It is difficult to say exactly what an appropriate policy mix should look like, as we are on relatively uncharted ground here. There will be a lot of “learning by doing”. New research will contribute to the learning, but bearing in mind the risks, we will also have to increase the pace at which the reforms are implemented. There will not be so much learning if we do not add a little more doing. The measures needed will probably have tangibly negative effects on private consumption and growth in the short term, but are necessary to reduce the risks of an even worse outcome further ahead. References Aikman, David, Haldane, Andrew G. and Nelson, Benjamin (2011), Curbing the Credit Cycle. Paper presented at the Columbia University Center on Capitalism and Society Annual Conference “Microfoundations for Macroeconomics”, New York. Altunbas, Y., L. Gambacorta and D. Marques-Ibanez (2014), Does Monetary Policy Affect Bank Risk? International Journal of Central Banking, March 2014. Bayoumi, Tamin, Giovanni Dell’Ariccia, Karl Habermeier, Tommaso Mancini-Griffoli, Fabián Valencia and an IMF Staff Team (2014), Monetary Policy in the New Normal, IMF Staff Discussion Note 14/3, International Monetary Fund. Bryant, Ralph C., Dale W. Henderson and Torbjörn Becker (2012), Maintaining Financial Stability in an Open Economy. SNS Förlag. Borio, Claudio (2012), The Financial Cycle and Macroeconomics: What Have We Learnt? BIS Working Papers No. 395. Carney, Mark (2013), Monetary Policy After the Fall. Speech at the University of Alberta 1 May 2013. Bank of Canada. Caruana, Jaime (2012), Policy Making in an Interconnected World.
For instance, the Riksbank’s analysis of the financial sector became more structured and systematised, and from 1997 we began to present our analysis in the form of Financial Stability Reports. This financial stability work was, however, far from fully-developed when a new financial crisis broke out just over six years ago, this time on a global scale. For instance, we still lacked a system for crisis management. We also failed to prevent a too rapid credit boom in the Baltic region, at the same time as Swedish banks proved to have liquidity problems when the dollar market froze. As the new crisis was deeper and affected a much larger number of countries than the crisis at the beginning of the 1990s, it also acted as a stronger and more worldwide signal that major efforts were needed to avoid financial imbalances causing problems in the economy as  BIS central bankers’ speeches  1  a whole. The most concrete expression of this opinion was the emergence of the policy area that came to be known as macroprudential policy, which aims to take the overall view of the financial system as a whole that was lacking prior to the crisis. In this context, it is worth pointing out that in Sweden the boundary between macroprudential policy and supervision of individual banks, microprudential policy, is not particularly distinct because of the market structure we have, with four dominant major banks.