Rogoff (2017), as well as Agrawal and Kimball (2015), have pointed out that if the central bank were to abolish cash entirely, or introduce an exchange rate between cash and central bank reserves, and allow this exchange rate to reflect negative interest rates, the lower bound could be eliminated entirely. But this is not an easy matter – part of the Riksbank's social contract with Sweden’s citizens is to offer the means of payment demanded and many citizens wish to continue to use cash. Accept low inflation One interesting question is that of which measure of inflation a small, open economy should actually have. The Riksbank measures inflation using the CPIF, and this basket includes quite a large element of imported goods, as Sweden is a small, open economy. The question is whether Sweden can have inflation on target if the rest of the world has very low inflation. Or must we accept that inflation is too low? Is it reasonable that the price of domestically produced goods and services is to increase by more than 2 per cent to compensate for imports being cheap? Yes, I consider such compensation is possible, as the variable exchange rate, in principle, can capture the difference between Swedish inflation and inflation abroad. The real economic conditions determine which relative prices prevail for Swedish and foreign goods. For example, a deterioration of the relative price of Swedish goods could arise through either a fall in Swedish prices or an increase in foreign prices or a combination of these.
From the Bank of  BIS Review 50/2009  1  Zambia’s point of view, the objective of financial stability remains key in all our activities. Financial stability depends to a large extent on the existence of robust risk management systems of financial institutions. It is therefore, important that risk management systems should keep pace with financial innovation. I have no doubt that the banking sector will rise to this challenge. Once again, thank you for the opportunity to witness this important event. 2  BIS Review 50/2009