Fiscal policy is then best handled by the government, not by the central bank. The Riksbank's monetary policy is already expansionary and contributing to supporting demand in the Swedish economy. But there are limited possibilities to make monetary policy even more expansionary, in my opinion. There are, however, good possibilities to make fiscal policy more expansionary. I therefore believe that fiscal policy will play a larger role in stabilisation policy if economic activity weakens further in the coming years. Climate change entails new economic and financial risks Climate change is one of the structural changes I have talked about today. I have noted that Örebro was one of the first municipalities in Sweden that issued a green bond. Here at Kommuninvest, in Örebro, I think that it may be appropriate to conclude by elaborating on what I see as the Riksbank's role in the work to achieve greener financial markets. Climate change affects the way the economy functions. Its impact is most clear in the insurance sector, as a direct consequence of the risks of climate-related damage. The risks may also increase on the financial markets when various branches are forced into major changeovers as a result of demand, taxation or regulations being changed. 7 Monetary policy can also be affected more directly, for instance if economic data becomes more difficult to interpret when the effects of the weather lead to larger fluctuations in prices and production.
Swedish Ministry of Finance (2019), “Uppdrag till Riksgäldskontoret att genomföra en emission av gröna obligationer”(Swedish National Debt Office tasked with issuing green bonds), Government decision, Fi2019/02708/S. NGFS (2019), “A call for action. Climate change as a source of financial risk”, Network for Greening the Financial System, First comprehensive report, April 2019. Rachel, Łukasz and Laurence H. Summers (2019),”On Falling Neutral Real Rates, Fiscal Policy, and the Risk of Secular Stagnation”, Brookings Papers on Economic Activity, spring 2019. Reichling, Lucrezia, Adair Turner and Michael Woodford (2019), “Helicopter money as a policy option”, VoxEU column. Shirai, Sayuri (2019), “Modern money theory and its implementation and challenges: The case of Japan”, VoxEU column. SOU (2017:115), “Att främja gröna obligationer” (Promoting green bonds), Report from the Inquiry into green bonds, Swedish Government Official Reports. Sveriges Riksbank (2019), Monetary Policy Report, October 2019. 7 [7]