It is difficult to estimate how the impact of a change in interest rate on growth and inflation will differ at different points in time and in different countries, but the attempts to do so indicate major differences. Given the fact that the composition of households' financial portfolios, their method of financing their accommodation, the significance of bank lending for corporate investments and the formulation of regulations and taxes differ substantially between different periods in time and different countries, this is hardly surprising. As I pointed out earlier, inflation expectations probably also play an important role in price setting. It therefore seems reasonable to assume that the exchange between interest rates and inflation is less in countries where monetary policy has been aimed at stabilising inflation expectations than in countries, and points in time, with large fluctuations in the inflation rate. There is also a monetary policy interest in being familiar with the banks' methods for credit assessment, to aid forward-looking assessments of growth under the assumption of unchanged monetary policy. When the Riksbank makes decisions on the formulation of monetary policy, these are based on, for instance, assessments of how households and companies will react to rising prices on shares and property. One important condition for enabling optimism regarding future growth and increase in wealth to be converted into consumption and investment is that this can be financed. This is where the banks' assessment of credit risks comes in.
It is intuitively easy to understand that the amount of money in the economy is a decisive factor for the price of the goods produced in the country. In modern economies, where payments are largely made electronically, the monopoly on issuing banknotes is no longer an equally evident condition for enabling monetary policy to determine price trends. Today, it is instead the right to determine the terms in the systems for large electronic payments between banks and the opportunity to influence how much the banks shall borrow or deposit in the Riksbank that enable us to steer interest rates. For electronic payments to be able to function as money, it is necessary for the central bank to be perceived as guarantor for these means of payment in the same ways as with banknotes. This role can only be fulfilled by a central bank and in this way one can say that the possibility to determine price trends in the economy still lies with the monopoly on issuing money. The Riksbank governs the shortest interest rate in the interbank market, so that it normally remains close to the monetary policy-steered repo rate. The fact that the Riksbank can steer the interbank rate is primarily due to the fact that each individual bank participating in the system handling large interbank payments - known as the RIX system - always has an opportunity to borrow and deposit money in the Riksbank overnight at the lending and deposit rates set by the Riksbank.