13 [15]  Diagram 3: Downward trend for global interest rates Per cent 6  6  4  4  2  2  0  0  UK -2  -2  USA Euro area Sweden  -4 96  00  -4 04  08  12  16  20  Sources: National central banks and the Riksbank Note. Real government bond yields, 10-year maturity  Diagram 4: Low neutral rate makes expansionary monetary policy more difficult  Policy rate  Actual policy rate Neutral policy rate  Time  14 [15]  Diagram 5: Less monetary policy scope with lower inflation target  Diagram 6: Difficult to forecast the policy rate The Riksbank  The Market  6  6  6  6  4  4  4  4  2  2  2  2  0  0  0  0  -2  -2  -2 06  09  12  15  18  21  -2 06  09  12  15  18  Sources: Thomson Reuters and the Riksbank Note. Per cent. The Riksbank's forecasts for the repo rate and market forward rates. Forward rates are a measure of the market agents’ expected repo rate according to different derivative contracts. They are estimated around the same time as the repo rate forecasts. 15 [15]  21
Allow me to recapitulate the consequences in a few words: various banks, stock brokerage firms and securities houses lost part or even all of their staff, their business premises, their backup facilities and their lines of communication. The markets remained closed on the following day, the equity markets even until the end of the week. From a systemic point of view, of even greater consequence than the closing of the equity market was the fact that the two markets for US government paper and for commercial paper, the main vehicles for short-term liquidity equalisation between market participants, had ceased to operate. Payment and settlement systems started to break down. Securities and credit balances totalling billions were thus blocked at some banks while lacking at others. Even though the terror attacks were concentrated on New York and Washington, in the beginning they not only paralysed Wall Street but they also threatened to undermine significant parts of the international financial system. It is much too soon, and this is not the proper place, to make an assessment of the profound human, social and political implications of the terror attacks. The resilience of the banks and the financial markets must be emphasised, however. A week after the attacks, business was almost back to usual again. In most cases, the banks and securities houses affected managed to solve their problems, some of which were immense. Neither a stock market crash nor a breakdown of parts of the financial system set in either in the United States or anywhere else.