But it also says that: “If there are signs that financial imbalances are building up, consideration of stable production and employment in some situations may lead to the interest rate being held slightly higher than it otherwise would have been”. 11  Why the Riksbank stopped “leaning against the wind” Up until a few years ago, Sweden conducted a similar policy to Norway. A development that worried us, and that we thought we needed to deal with, was that household debt and housing prices had been rising rather rapidly for some time. Even though the policy we conducted was mainly governed by traditional monetary policy motives, that is, the expected development of economic activity and inflation over the next few years, the risks associated with the development of household debt and housing prices were part of our assessment. To help dampen this development, the repo rate was therefore set slightly higher than would otherwise have been the case. There was thus an element of “leaning against the wind” in the policy, especially during the years after the financial crisis. 12 However, these fears also influenced the policy before the crisis, something I talked about at the conference in Jackson Hole in 2007. 13  For a review of the literature, see, for instance, Adrian and Liang (2018). Examples of studies saying that monetary policy should not “lean against the wind” include the International Monetary Fund (2015), Svensson (2017) and Kockerols and Kok (2019), while Filardo and Rungcharoenkitkul (2016, Gerdrup et al.
Concerning the intensive debate about the Riksbank’s policy, my conclusion was that it can be useful to have a system where the monetary policy remit and policy objective are reviewed at regular intervals, as is currently the case in for example Canada. This would create better understanding and legitimacy for the monetary policy conducted and clarify that the central bank actually only performs the remit it has been given. I also believe it can be a way to counteract the forces that seem to exist in many parts of the world to make central banks less independent. As regards the decline in cash use, there are not so many conclusions to draw as yet. What we can say for certain is that an e-krona would affect the conditions for monetary policy quite substantially, more or less regardless of how it is designed. It is wise that many countries are examining the scope for introducing e-money, as one of the lessons that after all can be learnt from developments in Sweden is that cash use in society can decline very rapidly. These were the experiences and reflections I wanted to share with you. Perhaps the conclusions I draw are not that spectacular. But I would like to believe that the observations and experiences that we practitioners and economic policy decisionmakers make in our day jobs, so to speak, slowly but surely help to enhance the level of our collective knowledge. My hope is that this could at least be a small contribution to this development.