For example, we evaluate such transmission in the Treasury tri-party repo market, the market in which ON RRP is conducted, by collecting similar trade-by-trade data from clearing banks. In addition to these overnight markets, we pay close attention to the Eurodollar market, which I’ll address later, as well as term money market rates. Avoiding unintended effects on the structure of the financial system A second lens for evaluating the operational framework is the extent to which it avoids creating incentives that might result in undesirable changes in the structure of the financial system. This means that the framework shouldn’t have lasting unintended effects on how people invest their money or on how financial institutions interact with each other. The Federal Reserve is operating the ON RRP on a temporary basis, primarily because the balance sheet is currently large. The FOMC’s policy normalization principles and plans make the temporary nature of the ON RRP clear by stating that it will be discontinued when it is no longer needed to help control the federal funds rate.26 This intention was noted again in the 4  BIS central bankers’ speeches  minutes to the January FOMC meeting. As a result, we expect that firms would not make structural changes in how they operate in response to the ON RRP, to avoid the cost of unwinding those changes when it is discontinued. The intention of the FOMC to impose an aggregate cap on the ON RRP, as described in the January minutes, will mitigate this risk.
Villy Bergström: The labour market and wage formation Speech by Mr Villy Bergström, Deputy Governor of Sveriges Riksbank, at the Association of Swedish Engineering Industries' HR director conference, Rimbo, 22 November 2005. *  *  *  Introduction Thank you for your invitation to come and speak here. Today, I will not be touching upon current economic policy in Sweden or the weakening of the krona exchange rate. I will return to those issues in a couple of days in a different speech. The shift in economic policy at the start of the 1990s has entailed better conditions for wage formation in Sweden. Among other things, the adoption of the inflation target has reduced uncertainty over future price developments. Wage-earners do not have to worry that their wage increases will be eroded by excessively fast price rises, while it is easier for employers to determine their scope for wage costs. The lower uncertainty over inflation is reflected in the fact that inflation expectations since the mid1990s have been firmly anchored around 2 per cent. It is important to remember that the current conditions for wage formation in Sweden – a floating exchange rate and inflation target – are considerably different from our previous regime with a fixed exchange rate. A fixed exchange rate was the norm in Sweden for some 130 years, even though the systems for maintaining it changed.