The Riksbank shares the responsibility for preventing financial crises with the Government and other authorities, in particular Finansinspektionen and the Swedish National Debt Office. The Riksbank’s responsibility in this area is expressed in the legislation as the task of “promoting a safe and efficient payments system”. More specific details are not given. Goodfriend and King discussed this issue in their evaluation of the Riksbank that was presented at the beginning of this year. 14 In their opinion, the Riksbank’s mandate should include financial stability and this should be clarified in the Sveriges Riksbank Act. I agree and welcome a discussion on how the responsibility should be formulated. An important question is what formal role the Riksbank should have as regards preventive work aimed at reducing risks and vulnerabilities in the financial system, including within the policy area of macroprudential policy, which focuses on preventing and mitigating systemic risks. Identifying systemic risks is nothing new in the world of central banking. What is new is the emergence of macroprudential policy as a policy area. This means that, in addition to the task of identifying systemic risks, clear mandates must also be defined for those who are to be responsible for macroprudential policy. In addition, a tool-box of different measures that can be taken to reduce systemic risks must also be developed. Neither are many of the tools and measures currently being discussed entirely new, but were already in central bank arsenals prior to the major wave of deregulations during the 1980s.
Improvements are urgently needed here so that we can tackle risks in good time and such procedures have also been recommended by the EU’s macroprudential policy body, the European Systemic Risk Board (ESRB). 16 Secondly, the Swedish structure falls short also when it comes to clarity in the division of responsibilities. Via its instruction, Finansinspektionen was given the responsibility to “take measures to counteract financial imbalances with the aim of stabilising the credit market”. No definition of what Finansinspektionen’s overall macroprudential policy task comprises has been formulated, however. This problem is highlighted by the decision process for the upcoming amortisation requirement. The Government has indeed tasked Finansinspektionen to produce regulations that more closely define the amortisation requirement but at the same time requires these regulations to be approved by the Government before Finansinspektionen adopts them. This is not in line with the ESRB’s recommendation that the macroprudential authority should as a minimum be operationally independent from political bodies. 17 The importance of independence when adopting macroprudential policy measures is also underscored by Goodfriend and King. This is, if anything, a return to the arrangement that often prevailed prior to the deregulations of the 1980s. A third problem with the Swedish macroprudential policy framework is that it has not been established by law. Finansinspektionen’s mandate in the macroprudential policy area is only a government ordinance and the Stability Council is formally only a committee.