Mr Bäckström covers monetary policy in Sweden from 1996 to 1998 Opening remarks by Mr Urban Bäckström, Governor of Sveriges Riksbank, the Swedish central bank, before the Standing Committee on Finance in Stockholm on 18 May 1999. Introduction In the period 1996–98 the annual rates of inflation, measured with the CPI, were 0.8, 0.9 and 0.4 per cent, respectively. This means that in each of these years the change in the CPI not only deviated from monetary policy’s 2 per cent target for price stability but was also outside the lower tolerance limit of 1 per cent inflation. The Riksbank has indeed made assessments that subsequently proved to be a bit off the mark. As a result we have also made decisions that, looking back when the outcome was known, could have been somewhat different. But on the whole, the result of monetary policy in this period seems to be acceptable. In my opening remarks I intend to give this appraisal more substance. One major reason why CPI inflation has been low in the past three years is that the price trend has been affected by some specific price movements that monetary policy neither can nor should aim to counter fully. If the Riksbank attempts to counter such price movements, the result might be unnecessarily costly for the economy, that is, exaggerated fluctuations in economic activity as well as in the financial markets. It was against this background that the new Executive Board of the Riksbank clarified the inflation target earlier this spring.
And all are competing for business in a way unthought of a few years ago witness the competition between LIFFE and Eurex for the long and short ends of the euro yield curve. The latest score in that particular England:Germany match is one all. No doubt German supporters think this score-line would have been a fairer result on Saturday night, given the balance of play! 1  BIS Review 51/2000  Role of technology But the common factor in all of these developments is technology. Physical trading floors for exchanges are fast-disappearing, particularly on this side of the Atlantic, replaced by virtual floors with trading conducted electronically. And exchanges are utilising their markets and system expertise to become trading system providers as well as market operators: OM has been a leader in this field for some time now, and LIFFE has announced some exciting plans - the creation of - fittingly enough “LIFFE.com” and its recent tie-up with Cap Gemini. On balance, these developments must be in investors’ interests. They reduce costs, improve access and allow exchanges to respond quickly and effectively to users’ changing needs. But they also present a number of challenges. To move from a trading floor, with its mix of locals, brokers and market makers, to an electronic order book, undoubtedly changes the dynamics of a market. For regulators, remote trading also brings some difficult challenges. Technology does not respect national boundaries; nor does it recognise different jurisdictions.