This proved not to be the case and these days we present the entire cohesive forecast for the inflation target, wages, GDP and its components, the repo rate and so on. I believe that by doing this we have increased the public’s understanding of monetary policy and reduced the drama surrounding the entire monetary policy process. Assessing economic activity entails reviewing material that is in a constant state of flux, and when we change our monetary policy these changes can be concretely related to changes in real-economic conditions. I would also like to add that the quantified forecasts are of course interesting, but the associated analyses of the driving forces behind different courses of development are at least as interesting. How do we make our forecasts? Developments abroad play an important role For a small open economy like the Swedish economy, the international outlook is the point of departure for the forecast. We cannot influence events abroad, but what happens there has a major impact on developments here at home. Here I would like to highlight some of the special aspects relating to the forecast of developments abroad. 1  Apart from the fact that it is considered desirable to stabilise resource utilisation, resource utilisation is also an important inflation indicator. Resource utilisation is thus an important factor that plays several roles in the monetary policy analysis and there is an almost constant discussion of what measures of resource utilisation are the most relevant.
It is the system that provides payment services, converts savings into financial resources for investment and consumption, and contributes facilities for managing risk. In other words, the financial system performs a number of important social functions. If any of these functions were to be disrupted, the social costs could be very high. The damage inflicted by a disruption would probably be particularly great if it involved a vital component of the payment system. This is readily understood when one considers the enormous flow of payments. In Sweden, for instance, the payment system has a daily turnover of around SEK 500 billion, which means that the equivalent of our annual gross domestic product has to be handled in less than a week. Studies show, moreover, that in the past fifteen years there have been more than a dozen crises which cost the countries concerned at least 10 per cent of their GDP. So there are good reasons for state supervision of the financial system. The Riksbank has a function here in that the Riksdag (Sweden’s parliament) has made us accountable for promoting a safe and efficient payment system. A major ground for making us responsible for efficiency and stability is that, along with the banks, the Riksbank is a central player in the payment system and provides means of payments. The banks distribute notes and coins, keep transaction accounts linked to giro systems and operate credit card systems. The Riksbank in turn provides accounts in the payment system, RIX, that is available for large-value interbank payments.