However, ensuring that the payment system functions efficiently is also a fairly general definition that requires further precision. To become more specific, it is necessary to define what characterises an efficient payment system. I intend to discuss two characteristics here that I perceive to be the most central – price stability and financial stability. Price stability An important component of an efficient payment system is that economic agents have confidence that the value of the means of payment will remain stable over time, that is in practice that inflation will be low and stable. One usually expresses this as there being a nominal anchor that prevents inflation and inflation expectations from drifting off. If households and companies are confident that the general price level will not change very much, they are better able to plan for the future and need not put effort  1  See, for instance, Santomero, A.M., S. Viotti and A. Vredin, (2001), "Challenges for Central Banking: An Introduction”, in Santomero, A.M., S. Viotti and A. Vredin (ed. ), Challenges for Central Banking, Kluwer Academic Publishers. BIS Review 52/2006  1  into finding ways of protecting themselves against inflation, but can focus on more productive activities. Another argument for keeping inflation low focuses on the role of price formation as a signalling system. When inflation is low and stable it is easier for economic agents to distinguish changes in relative prices and to adjust their decisions regarding consumption, saving, work and investment accordingly.
The whole point of allowing monetary policy decisions to be made by a group of people and not one  BIS Review 134/2010  5  individual can be summarised in the expression “many heads are better than one”. And this would not apply if we all thought in the same way, if we were all clones. Then one single decision-maker would be sufficient. It may be worth pointing out that the fact that we have been publishing our own forecast for the repo rate for a few years now has probably meant that it becomes more noticeable when we disagree. The repo rate path makes it necessary to have a deeper and more long-term discussion than if we were just making a decision on whether or not the current repo rate should be changed. My impression is that the repo rate path has increased the quality of the monetary policy discussion both internally and outside of the Riksbank. But it also means that, to put it simply, we have more to disagree on. The fact that members of a monetary policy committee have different backgrounds, experiences and knowledge means that they approach an interest rate decision from slightly different directions, and they analyse and argue in slightly different ways. These differences do make demands that one must find some form of “common denominator” in the monetary policy discussion so that members do not talk at cross-purposes.