Compared with other countries that have implemented similar reforms, it is perhaps primarily the changes in fiscal policy that distinguish Sweden. During the mid-1990s a radical consolidation program was implemented, with broad parliamentary support, and a framework with an expenditure ceiling and target balance was introduced. The relatively good central government finances over the past ten years have undoubtedly been a source of strength for the Swedish economy. 2  BIS Review 8/2007  The Riksbank’s monetary policy framework and strategy Let me now, with this as background, move on to describe our monetary policy strategy in slightly more detail. 1 The inflation target The Riksbank has chosen to specify an explicit target for inflation. The target is for the annual rate of change in the consumer price index, CPI, to be 2 per cent, with a tolerance for deviations of ± 1 percentage point. The decision to define the target for monetary policy clearly in terms of a specific figure was of course partly due to the desire to create a nominal anchor that everyone could recognise and base their expectations on. However, another important reason was that it would facilitate assessments of the Riksbank’s activities and make the Bank more easily accountable. This is particularly important now that the Bank is so independent. Inflation can be measured in many different ways. The Riksbank chose the CPI as target variable partly because it is a broad price index that represents typical purchases made by consumers, and the index is familiar to the general public.
Yes, there are new and continuing challenges to business models across the whole of the insurance sector, whether from changes to Government regulations affecting annuity businesses, through the advent of new capital, particularly in re-insurance, to challenges from overseas insurers. Those challenges are short, medium and long-term and very considerable. We can’t – and won’t – take our eyes off those challenges to the industry. But Solvency II is a train of the future speeding down the track towards us – for both regulators and firms the message is: be on board or get left behind. So it is a key priority for us, working with you, to get implementation right and on time. The clocks are counting down. We are now at a pivotal moment for Solvency II preparations. Solvency II will bring about the most significant change to the industry in decades. Following years of negotiation and delays, we are finally at a point where the end is in sight and the regime is to become a reality. With the majority of the legislation now finalised, the PRA’s focus has shifted to implementation. Since assuming this responsibility in early August, I have been struck by the volume of activity and the energy with which PRA staff are working to ensure that we – and most of you – hit the 1/1/16 deadline.