Our instrument independence – that we ourselves have been able to choose among our tools to attain our objectives and to use them quickly – has been essential in alleviating the effects of the crisis and contributing to good economic developments. I personally think that perhaps the most obvious monetary policy conclusion from the coronavirus crisis is that the repo rate is far from adequate in maintaining our price stability objective. Although I am discussing monetary policy today, I would also like to emphasise that the fiscal policy measures in Sweden and abroad have been a decisive factor in the special type of crisis in which we have found ourselves – some sectors have needed extensive support. 28 For a description of how the Riksbank’s measures have worked during the crisis, see for instance Sveriges Riksbank (2020b). 10 [20]  Proposal for new Sveriges Riksbank Act too limiting with regard to monetary policy toolbox We at the Riksbank consider the proposal for the new Sveriges Riksbank Act presented in December 2019 to be good in several aspects. But when it comes to the monetary policy toolbox, we think the proposal is far too restrictive. I do not believe that it sufficiently reflects the lessons I have just described. 29 There is thus a risk that it will become more difficult, not just for us, but also for future Executive Boards to make a good contribution to socio-economic developments.
Hedging markets developed rapidly. All in all, financial engineering emerged as a new area of knowledge. Dear Guests, The aggressive capital movements among countries and developments in financial markets generated a number of economic benefits at the global level. When borders between countries have disappeared in favor of capital flows, funds flew to regions where capital had the highest return. So, it has been observed that competitiveness and productivity of capital in global scale increased considerably in the 90s. There has been also a substantial rise in the volume of global merchandise trade. However, all developments that I mentioned now represent only the front side of the medallion. The back of the medallion has not been as bright as the front. In the 90’s, not only the scope, timing and speed of the financial liberalization varied across countries, but also the consequences of economic policies had various effects on national economies, depending on the initial conditions and country specific factors. Hence, the rapid increase in capital movements among countries shook the financial markets from time to time, led to financial and banking crises in many countries and, even more importantly, caused the crisis in one country to spread to others. In 2003, Caprio and Klingebiel reported 117 episodes of systemic and highly costly financial crises in developed and emerging market countries since the late 1970’s1.