Kerstin af Jochnick: My thoughts on monetary policy and financial stability Speech by Ms Kerstin af Jochnick, First Deputy Governor of the Sveriges Riksbank, at a meeting at SEB, Stockholm, 4 May 2012. *  *  *  As this is my first public speech as a member of the Executive Board of the Riksbank I would like to take this opportunity – from the starting point of my previous background – to point out a number of factors that are important to my view of monetary policy and financial stability. First: Sweden has become increasingly dependent on what happens abroad. How the debt crisis in Europe is managed is the most important factor for economic activity and monetary policy in the period ahead. Second: There are links between monetary policy and financial stability. We must be aware that imbalances and risks to financial stability can arise if interest rates remain low for too long. Third: One of the most important lessons of the financial crisis is the need to adopt a broader perspective on financial stability – as in the new policy area macroprudential policy. The Riksbank should play a major role in the work with macroprudential policy. How my background has shaped my view of the Riksbank’s work As most of you know I am a new member of the Executive Board of the Riksbank, which I joined at the turn of the year.
The MPC process, however, involves no pressure to reach agreement. We are each accountable for our views; full minutes are taken and published; our individual vote is publicly recorded. This is counter-intuitive for anyone from a PLC background. It is impossible to believe that a split in the Board of a major corporation, certainly a split that was aired in the press, could exist for any length of time. Either the split would need to heal rapidly, or more likely some high-profile departures from the Board would ensue. But in the MPC a system which permits different views to surface publicly is both refreshing and appropriate. Since economic analysis involves a great deal of peering into the future, it is not surprising that there should be disagreement. There is, of course, the old joke of putting nine  BIS Review 102/2000  2  Economists into one room and getting ten views. But it is better to be open about the disagreements than try to forge a false sense of consensus. Of course, alongside this transparency and open voting system goes a degree of personalisation within the Press. An industry has grown up geared to guessing our personal habits, psychoanalysing our personalities and classifying us into different species of the aviary. And alongside this has gone a demand for even greater transparency which falls only a little short of having TV cameras in the Committee Room.