Lars E O Svensson: Monetary policy after the financial crisis Speech by Mr Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at the Second International Journal of Central Banking (IJCB) Fall Conference, Tokyo, 17 September 2010. *  *  *  I thank Claes Berg, Marianne Nessén, Staffan Viotti and Barbro Wickman-Parak for comments on this speech. The views expressed here are my own and not necessarily those of other members of the Riks-bank’s Executive Board or of the Riksbank’s staff. Gabriela Guibourg of the Riksbank’s staff has contrib-uted to this speech. As the world economy recovers from the recent financial crisis and the Great Recession that followed, a debate is going on regarding the causes behind the crisis and how to reduce the risk of future crises. The role of monetary policy and its relation to financial stability are also under debate and some argue that there is a need to modify the framework of flexible inflation targeting and give a greater role to financial-stability considerations. Some blame too expansionary monetary policy by the Federal Reserve after 2001 for laying the foundation for the crisis. My view is that the crisis was largely caused by factors that had very little to do with monetary policy.
In itself, a difference in the weight of a small state and a large state may make sense; but if certain EU member states have a much bigger informal impact than others on the positions that the EU takes in international political or economic forums, the big-impact states may be tempted to “nationalise” the voice of the EU. Many attempts at nationalisation of EU positions are due to what might be called the “French complex”: Some leaders of bigger countries still have not fully absorbed the fact that their country is no longer the superpower it used to be and no longer leads the world, so they often try to abuse their EU-wide voice to support their national interests, positions and agenda. When they call for Europe to speak with “one voice”, they often seem to expect that the single voice of 500 million EU citizens will be the voice of their national leaders, articulating their national tastes and priorities. Of course, the agent, the European Commission as an executive arm of the EU, also sometimes has this temptation to define or steal the voice of the EU. Needless to say, the risk that proper integration will be derailed is particularly high when the two effects mentioned above are combined – when the EU administration ceases to behave as an agent of the less powerful principals but remains under the spell of a few very strong principals.