SPEECH DATE:  7 April 2017  SPEAKER:  Deputy Governor Henry Ohlsson  VENUE:  Swedish Trade Union Confederation, Stockholm  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergst org 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn @ riks ban k.se www.riksb ank.s e  The distributional effects of monetary policy “Price stability is a prerequisite for sustained economic growth as well as full employment and it prevents an arbitrary redistribution of income and wealth.” This is how the Riksbank concluded its press release on 15 January 1993, when the inflation target was announced. The link between monetary policy, growth and employment has been very much in focus over the almost 25 years that have passed since then. The distributional effects of monetary policy, on the other hand, have been more or less overlooked, until the question came into the spotlight again in recent years. When the Riksbank decided in early 1993 to begin steering its policy towards an inflation target, it was starting from a period when the major problem had been a high rate of inflation and also a rate of inflation that fluctuated substantially from one year to the next. Having a high inflation rate is as we know a problem i n itself, but it also becomes more difficult for households and companies to make financial decisions, as the real value of savings, investments and debt is affected by large fluctuations in inflation.
Telecom stocks have fallen seriously out of favour, particularly in Europe as the companies embark upon what the Economist has just described as perhaps the “biggest gamble in business history”. This is the $ billion investment in 3G licenses and networks - a lot of money to spend when the return on the investment is uncertain to say the least. It remains to be seen – outside Japan at least - how consumers will take to the mobile internet concept. The lukewarm response to WAP phones is not a good omen, although admittedly the technology in this case is much cruder than what is being claimed for 3G. Let us just hope that 3G will live up to the expectations. Even with the traditional pc-based internet, the signals are mixed. Everyone can see the ability of the internet to transform communication, flows of information and business processes. But the means to turn this into revenues and more especially into profits have proved to be somewhat elusive, as the closure or consolidation of a number of e-tailers has shown. In a period of radical transformation such as we are going through at present there are bound to be a number of false starts and failures before the business models that can successfully exploit the new technology emerge. This period of uncertainty poses important strategic challenges and increased risks for the banks in their role both as major users of the technology and as providers of funds to the companies which are putting that technology in place.