A council for cooperation on macroprudential policy How Sweden should best organise macroprudential policy for the financial system is one of the – very difficult – questions currently being addressed by the Financial Crisis Commission. While awaiting the report of the Commission and a future parliamentary decision on a longterm solution for a macroprudential policy framework we will have to try to make the most of the existing arrangements. It makes sense that a small country like Sweden should utilise the expertise and know-how that already exist at the Riksbank and Finansinspektionen. In January 2012, these two organisations set up a joint council for cooperation on macroprudential policy. The idea behind this council is that the authorities should consult and exchange information concerning their assessments of risks to the financial system as a whole, and discuss appropriate measures to prevent these risks. Another task will be to discuss the development of tools and methods in the area of macroprudential policy. The first meeting of the council was held on 24 February and the aim is that the council should meet at least twice a year. The minutes of the meeting are available on the websites of the Riksbank and Finansinspektionen. The intention is to publish the minutes of all the meetings. Great need for clear communication The publication of these minutes is an expression of the ambition to be open and transparent – an ambition that has become something of a trademark of the exercise of public authority in Sweden.
3  EBA (2011): EBA recommendation on the creation and supervisory oversight of temporary capital buffers to restore market confidence (EBA/REC/2011/1)  4  Ekholm (2009): Some lessons for monetary policy from the financial crisis, speech held on 4 December 2009. 5  See for example Bernanke (2010): Monetary Policy and the Housing Bubble, speech held on 3 January, 2010, and Dokko, Doyle, Kiley, Kim, Sherlund, Sim and Van der Heuvel (2009): Monetary Policy and the Housing Bubble, Finance and Economics Discussion Series 2009-49, Federal Reserve Board. 2  BIS central bankers’ speeches  Figure 1 Policy rates minus actual inflation (CPI change), 1998–, per cent  Sources: Central banks and statistics agencies in the respective countries  Countries such as Ireland and Spain have also seen a bubble-like development of their housing markets: first a situation with gradually rising prices over a long period of time which was then followed by a rapid fall. Would it have been possible to avoid this if the ECB had conducted a tighter monetary policy and what would this tighter policy have cost in terms of unemployment and possible deflation in countries such as Germany, where the economy was developing quite differently? 6 I have no clear answers to these questions. But even though it is possible that an expansionary monetary policy contributed to the development of housing-price bubbles in some countries, it is still the case that other factors were the prime causes of the global financial crisis.