For instance, international developments may be weaker than expected if the US economy slows down more suddenly than expected. With regard to economic activity in Sweden, we instead see a risk that we are underestimating domestic demand. The way energy prices will develop in future is another genuinely uncertain factor in our forecasts. Let me finally, before I summarise what I have already said, say a few words about our views on fiscal policy. As I mentioned at the beginning, the economic policy regime we have had in Sweden over the past decade has functioned well. It has created a stability in the economy that we have not experienced in decades. An absolute condition for this regime has been that fiscal policy is conducted in a way that is compatible with long-term sustainable public finances. This condition would certainly appear to be met. Having said that, one may observe that the formulation of fiscal policy in the short term affects supply and demand, employment and inflation. It thereby becomes a factor that needs to be taken into consideration when formulating monetary policy (Figure 14). The new budget entails a slightly more expansionary fiscal policy and thereby slightly stronger consumer demand than we had earlier assumed. However, above all the budget contained measures aimed at improving the labour market. In qualitative terms it appears reasonable to assume that these measures will increase the labour supply and gradually also employment.
This builds on the foundations of a new responsible global financial system that are being put in place. The combination of robust international standards and greater trust as a consequence of transparent implementation and intensive supervisory cooperation can create a system of enhanced equivalence and mutual deference. Such an approach would allow capital to move more freely, efficiently and sustainably between jurisdictions. With robust standards consistently applied, wholesale financial services could be brought more fully into trade agreements, keeping the global financial system open and resilient, and supporting greater trade, investment and innovation. This high road leads to more jobs, higher sustainable growth, and better risk management across the G20. Working Together to Take Full Advantage The high road can be followed if my third priority – taking full advantage of the progress made – is pursued. In this regard, it is important not just to recognise progress made but how it has been made. The FSB has succeeded by emphasising collaboration, consensus and openness. Its strength lies in its members who bring authority, expertise and shared objectives. The FSB is not a treaty-based organisation, so its standards do not have direct force in any member jurisdiction. Decisions are ultimately matters for national authorities who – acting out of enlightened selfinterest and in recognition of the benefits of a resilient and open global financial system – guide and discipline the reform process.