For example, the number of company bankruptcies and loan losses in the banks is usually higher when economic activity is low and vice versa. There is also a fundamental relationship between our fields of activity. The Riksbank’s most important tool in conducting monetary policy is the repo rate. One can say that we try to influence economic activity and inflation by steering the price of credit, that is,  BIS Review 119/2008  1  interest rates. But to be able to do this, the payment system and our interest rate steering system must function. Financial stability is therefore actually a necessary condition for being able to conduct monetary policy efficiently. With regard to financial stability, the Riksbank makes regular updated assessments. I shall soon return to our views on current developments. But before I do so, I would like to say a few words about what the task of safeguarding financial stability actually entails. Most people are probably aware that we have an inflation target for monetary policy. But what do we mean by financial stability? What do we mean by financial stability? Financial stability is not so easy to define. In the Sveriges Riksbank Act the Riksbank’s task that we commonly refer to as safeguarding financial stability is formulated as “to promote a safe and efficient payment system”. Put simply, this concerns working in different ways to ensure that he financial system is stable and functions smoothly. This is important for many reasons.
In conclusion, as we embark on financial reforms, we have to be forward looking, to ensure that we do not just have a resilient global financial system, but also one that can support sustainable economic growth. We need better regulations, better appreciation of the macro-financial linkages, and firmer supervision. Globally coordinated efforts and strong cross border cooperation in some areas, as well as local efforts that are context-specific are both needed to achieve the desired regulatory outcomes. 29. Singapore is honoured to host the 16th ICBS on our common supervisory journey. I wish you a meaningful and fruitful discussion, as well as a pleasant and memorable stay here in Singapore. Thank you. 4  BIS Review 121/2010