The evaluation has had greater scope to discuss these weaknesses in more detail than was possible in the Riksbank’s proposal, and it also highlights a number of important principles as to how one can conduct and organise the financial stability work. I believe that these arguments in particular can provide a valuable contribution to discussions in Sweden and to our own development work at the Riksbank, but perhaps most of all to the work of the financial crisis committee. 1  Proposal to the Riksdag 2009/10:RB4, “Proposal regarding certain areas that require investigation as a result of the financial crisis”. (http://www.riksbank.se/templates/Page.aspx?id=43390). BIS central bankers’ speeches  1  Something I consider to be quite crucial in this context is that we do not create institutions that lack the necessary power to make decisions. By this I mean that in all parts of the work on preventing and managing financial crises we should have some institution that is clearly responsible and this institution should also have the necessary mandate, tools and resources to handle this responsibility. When it comes to putting this into practice I believe that Goodhart’s and Rochet’s more theoretical reasoning regarding allocation of responsibility and institutional solutions could be very useful. But, as they are also careful to point out, the principles they discuss must be implemented in a way that suits each country’s individual characteristics. And each country must find its own way.
We at the Riksbank prefer to present our more detailed views on the evaluation during the consultation rounds, so today I intend to make a few more general comments. Regarding financial stability – we need clear legislation and efficient institutions I do not believe that anyone would still doubt that the risk of a financial crisis is a very real risk that we must learn to live with and to manage in the best possible way. It is probably also quite clear what is at stake here – a financial crisis could entail substantial costs for society. We must therefore learn from the experiences of the crisis and ensure that we are as wellequipped as possible to face any new crises in the future. This requires in an initial stage taking an overall approach to both crisis management and crisis prevention work, something that the government’s recently-appointed financial crisis commission has been tasked to deal with. Ultimately, the goal is to establish effective legislation and efficient institutions. The financial crisis that we have lived with over the past few years has tested institutions and legislation to breaking point, in Sweden and abroad. This has highlighted some old weaknesses in the legislative framework, and we have also discovered some new deficiencies. Even before the Committee on Finance’s evaluation was published, the Riksbank pointed out a number of weaknesses that require attention in a proposal to the Riksdag.1 It is therefore gratifying that Goodhart and Rochet clearly point out largely the same weaknesses.