4  3 [20]  that the central bank determines how its tools are used to attain the goals that have been set. There are also other ways of making the central bank independent of the political system. Personal independence concerns how the bank’s management is appointed. If the board members have long terms of office, are not politicians and cannot be dismissed for political reasons, then there is considerable personal independence. Financial independence means that the bank can take measures without relying on financial support from the Government. One can say that the new act in 1999 gave the Riksbank a large measure of independence according to all of the four varieties above (see Figures 1 and 2). 9 The Riksbank decided itself, through its Governing Council, on the introduction of the inflation target in 1993, and in 1999 price stability was introduced into the act as objective for the Riksbank. Goal independence was thus strong, as the Riksbank can itself determine how the target will be attained in operational terms. One sign of this was that we much later, in 2017, decided ourselves to change the target variable from the CPI to the CPIF. We were also given a mandate to decide independently on how the monetary policy instruments would be used to attain our inflation target and in this way we gained a high level of instrument independence.
Narrow or broad mandate for central banks? Political influence  Political independence Narrow target definition, few tools  Broad target definition, many tools  17 [20]  Figure 7. Yield spread between different types of bond and government bonds in Sweden Percentage points 2,5  2,5  Municipal bond, 5 year Corporate bond, 5 year Covered bond, 5 year  2,0  2,0  1,5  1,5  1,0  1,0  0,5  0,5  0,0 Jan-19  Jul-19  Jan-20  Jul-20  0,0  Jan-21  Note. Percentage points. Yields on covered bonds, corporate bonds and government bonds are zero coupon rates calculated using the Nelson-Siegel method. Corporate bonds refer to companies with a high credit rating. Municipal bonds are issued by Kommuninvest i Sverige AB. Broken line marks 11 March 2020, same day the WHO declared COVID-19 to be a pandemic. Sources: Bloomberg, Macrobond, Refinitiv and the Riksbank. Figure 8. Borrowing among non-financial corporates Percentage of GDP, quarterly data 80  80  60  60  40  40  20  20  0  0  95  00  05  10  Lending from MFI  15  20  Issued securities  Note. Includes securities borrowing in both Swedish kronor and foreign currency. Sources: Statistics Sweden and the Riksbank  18 [20]  Figure 9.